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Rising  Costs  of  Living 


BY 


0.  FRED  BOUCKE 


A  THESIS 

PRESENTED  TO  THE  FACULTY   OF   THE  GRADUATE,  SCHOOL  IN- 
PARTIAL  FULFILLMENT   OF  THE   REQUIREMENTS   FOR 
THE  DEGREE   OF  DOCTOR  OF   PHILOSOPHY 


Cl|»  fljnlljgurtr  JJr 

GEORGE  BANTA  PUBLISHING  COMPANY 

MENASHA,  WISCONSIN 

1916 


•».!  tjt*  *: 


University  of  Pennsylvania 


Rising  Costs  of  Living 


BY 


0.  FRED  BOUCKE 


A  THESIS 

PRESENTED   TO   THE  FACULTY   OF  THE   GRADUATE   SCHOOL  IN 

PARTIAL  FULFILLMENT   OF   THE  REQUIREMENTS   FOR 

THE  DEGREE   OF   DOCTOR   OF   PHILOSOPHY 


?Eh»  Colkgiirts  ^rw 

GEORGE  BANTA  PUBLISHING  COMPANY 

MENASHA,  WISCONSIN 

1916 


*%1 


^ 


CONTENTS 

List  of  Tables  and  Figures v 

Introduction 1 

Part  I — Production 

Chapter  I,  Changes  in  Supply 5 

Chapter  II,  Changes  in  Costs 19 

Part  II — Distribution 

Chapter  I,  Changes  in  Price 33 

Chapter  II,  Changes  in  Income 45 

Appendix,  Method  for  Calculating  Factorial  Incomes 75 

Conclusion 82 

Bibliography 86 


3G12oj 


LIST  OF  TABLES  AND  FIGURES 

A.  Tables 

page 
No.  of  Table  7 

I.  Agricultural  Production  in  1889  and  1909 

2     Agricultural  Production  in  1899  and  1909 

3.  Production  and  Exports  and  Imports  of  Agricultural  Staples  between  1889     ^ 

and  1913 " "" 

4.  Production  (by  Quantity)  in  Agriculture,  Forestry  and  Mining  with  special 

Reference  to  Fixed  and  Circulating  Capital,  m  1889  and  1909 M 

5.  Groups  of  Producers  and  Non-Producers  in  1890  and  1910 20 

6.  Costs  of  Production  in  Agriculture,  in  1889  and  1909 29 

7      Costs  of  Production  in  Agriculture,  in  1899  and  1909 30 

8.  Relative  Wholesale  Prices  by  Principal  Groups  of  Commodities,  from  1890    ^ 

to  1912 ■;■" ;■" 

9.  Production  (by  Value)  in  Agriculture,  Fonstiy,  and  Mining  with  special 

Reference  to  Fixed  and  Circulating  Capital,  in  1889  and  1909 & 

10.    Indices  of  Wages  per  Hour  in  Principal  Fields  of  Production,  from  1890  ^ 

to  1912 " 

II.  Indices  of  Wages  per  Hour  in  Specified  Industries,  1890  to  1912 48 

12.  Gross  and  Net  Returns  in  Agriculture,  1899  and  1909 * 

13.  The  Redistribution  of  Incomes  between  1890  and  1910 

14.  Family-Budgets  in  1891  and  1901 

15.  Relative  Standing  of  Occupational  Classes,  1890  and  1910 


B.  Figures 

t  Option  of  Thirty-Seven  Commodities  and  Service,  1890  to  1914... )  J  15 
2      Growth  of  Twenty-Four  Occupational  Classes,  1890  to  1910 )  * 

3.  Fixed  and  Circulating  Capital-Goods  in  National  Production,  in  1889  and     ^ 

1909 »"*» 

4.  The  Factorial  Distribution  of  Incomes,  in  1890  and  1910 


IS  65 


INTRODUCTION 

The  topic  of  rising  costs  of  living  is  not  discussed  as  widely  today  as 
some  years  ago.  Apparently  people  have  lost  interest  in  the  phenomenon 
which  was  watched  most  attentively  between  19071  and  1912  and  during 
that  time  provoked  a  wealth  of  comment,  both  by  economists  and  on  the 
part  of  the  general  public.  One  may  assume  either  that  we  have  grown 
accustomed  to  high  costs  or  else  that  with  the  rise  of  new  problems  the 
old  have  grown  stale. 

But  whatever  the  reason  it  is  made  clear  by  a  perusal  of  this  literature 
that  from  beginning  to  end  two  viewpoints  predominated.  These  were, 
first  that  an  explanation  of  high  costs  of  living  involves  a  study  of  price- 
levels,  and  secondly  that  rising  prices  as  such  constitute  an  evil. 

The  quantity-theory  of  money2  may  be  identified  with  the  first  group 
of  writings.  It  proceeds  to  show  that  the  amounts  of  money  in  circula- 
tion and  price-levels  are  closely  related,  indeed  that  a  rise  or  fall  in  the 
one  necessitates  a  proportionate  rise  or  fall  in  the  other.  Furthermore, 
it  makes  gold  the  decisive  factor  among  the  various  sorts  of  money  cir- 
culating, and  considers  the  ratio  between  gold  stocks  and  bank-deposits 
subject  to  check  fairly  rigid.  Thus  gold  becomes  a  causal  force  which 
normally  determines  price-levels  and  expresses  through  its  changes  chang- 
ing costs  of  living.3 

This,  briefly,  is  the  theory  in  its  most  recent  and  commonly  accepted 
form.  It  puts  the  question  of  prices  in  the  centre  of  discussion  identi- 
fying, furthermore,  such  movements  with  the  problem  of  costs  of  living 
itself.  But  manifestly  there  is  a  weakness  in  the  monetary  interpreta- 
tion which  no  particular  version  of  it  can  escape.  In  a  word :  One  may 
grant  the  truth  of  the  equation  of  exchange,4  or  even  the  chain  of  causa- 
tion from  gold  to  average  prices,  and  still  deem  the  matter  of  costs  un- 
touched. For  the  real  problem  has  to  do,  not  with  a  price-level,  but  with 
particular  prices,  not  with  money  but  with  values  of  goods  in  terms  of 
effort  and  other  goods,  in  short,  not  with  static  terminals  of  time  but  with 
periods  of  change,  with  dynamics. 

1  The  number  of  magazine  articles  listed  in  Readers  Guide  to  Periodical  Literature, 
under  the  caption  "High  Costs  of  Living"  was  for:  1904  to  1907,  about  forty;  1908  to  1912, 
about  two  hundred;  1913-14,  about'fifty. — See  also  Annals  of  the  American  Academy 
of  Political  and  Social  Science,  Sept.  1911,  for  citations  by  Mr.  Roger  W.  Babson. 

2  Fisher,  Irving,  The  Purchasing  Power  of  Money,  and  Why  the  Dollar  is  Shrinking. 

3  Fisher,  I.,  The  Purchasing  Power  of  Money,  edit .  19 1 1 ,  pa  1  Sir  1 59 . 
4MV+M'V'  =  PT,  where  M  is  circulating  money,  the  "V's"  velocity  of  circula- 
tion or  rate  of  turn-over,  P  the  price-level,  and  T  the  volume  of  trade. 


2  RISING  COSTS  OF  LIVING 

If  all  prices  were  merely  doubled  none  would  complain  probably, 
however  short-sighted  human  nature.  What  nettles  the  popular  mind 
is  the  uneven  rise  of  different  sets  of  prices.  The  common-sense  man 
asks:  "why  does  my  income  buy  less?"  not,  "why  does  a  dollar  buy  less?" 
For  him  it  is  a  matter  of  ratios  between  income  and  outgo.  The  difficulty 
lies  in  proving  whether  society  as  a  whole  has  more  or  less  to  consume 
than  formerly,  or  whether  some  are  getting  more  both  qualitatively  and 
quantitatively,  while  others  receive  less.  Costs  of  living  may  be  said  to 
have  risen  generally  when  the  former  is  the  case,  especially  if  labor  pro- 
duces a  decreasing  amount,  or  locally  when  the  second  happens. 

But  which  ever  view  we  take,  plainly  the  quantity  theory  of  money 
falls  down  on  an  important  point.  It  implies  that  costs  of  living  would 
not  change  substantially  without  such  a  dispersion  of  prices  as  gold- 
movements  occasion.  It  ignores  particular  prices  for  the  sake  of  following 
a  broad  price-level.  It  lifts  the  concept  of  price  out  of  its  socio- 
economic environment  and  is  unable  to  adapt  itself  to  a  society  whose 
supplies  and  values  change  independently  of  money.5  If  the  monetary 
interpretation  is  adequate  a  stabilization  of  prices  is  not  only  feasible  but 
inevitable,  once  stocks  of  gold  have  been  made  constant.  Either  we  do 
not  concede  this,  or  the  quantity-advocate  fails  to  cover  the  problem  of 
rising  costs  by  establishing  a  law  of  price-levels.  In  both  cases  a  further 
search  for  a  key  to  our  problem  becomes  worth  while. 

The  second  viewpoint  held  so  consistently  in  popular  treatments  con- 
nects also  with  price,  but  in  a  quite  different  sense.  The  aim  now  is,  not 
to  fuse  all  goods  and  services  into  a  universal  index,  but  to  contrast  prices 
with  wages  and  to  pronounce  times  bad  when  prices  rise,  and  good  when 
they  fall  while  wages  are  going  up.  Not  money-  but  labor-prices  are 
kept  in  mind.     Hence  cheapness  is  lauded  and  dearness  decried. 

Roughly  this  corresponds  to  a  theory  of  prices  and  distribution 
launched  by  the  classics,  but  endorsed  by  many  thinkers  since  then.  So 
it  will  not  be  amiss  to  illustrate  it  from  the  works  of  Adam  Smith  who  is 
its  first  sponsor,  in  order  to  contrast  it  thereafter  with  a  doctrine  of  more 
recent  origin. 

To  Adam  Smith6  the  hall-mark  of  progress  was  cheapness  and  plenty. 
He  showed  that  history  was  nothing  if  not  a  continual  improvement  of 
productive  methods  and  an  expansion  of  social  income.  But  in  the  wake 
of  it  should  come  lower  labor-costs  and  a  higher  wage  procured  through 

5  Fisher,  I.,  Purchasing  Power  of Money,  edit.  1911,  p.  316. 

6  Adam  Smith,  A  n  Inquiry  into  the  Nature  and  Causes  of  the  Wealth  of  Nations, 
Book  I,  chapters  5-11;  Book  II,  chapter  1;  Book  III,  chapter  1. 


INTRODUCTION  6 

the  bounties  of  nature  in  conjunction  with  man's  ingenuity.  In  other 
words,  proprietors  of  the  soil  and  wage-earners  had  one  common  interest, 
while  in  conflict  with  them  was  the  policy  of  the  manufacturer  and  trader 
whose  profits  encroached  on  wages.  Competition  would  level  all  incomes 
ultimately,  but  meanwhile  prosperity  consisted  in  a  cheapening  of  food 
and  commodities  used  by  labor.  Falling  prices  invariably  accompany 
a  growth  of  national  opulence,  as  embodied  in  a  larger  population  and  a 
pleasing  abundance  of  wheat  and  meat.  Competition  was  the  driving 
force  in  this  direction. 

If  we  apply  this  test  to  the  period  here  under  review,  namely,  the 
years  1890  to  1915,  the  result  is  disconcerting,  to  say  the  least.  Much 
effort  has  been  devoted  to  demonstrating  that  wages  relative  to  other 
sources  of  income  have  not  increased  lately,  but  on  the  contrary  fallen.  On 
the  other  hand  it  is  a  commonplace  to  dwell  on  the  remarkable  growth 
of  wealth  and  production,  or  to  enumerate  signs  of  material  progress  in 
our  mode  of  living.  It  needs  only  a  moment's  reflection  on  the  indubi- 
table facts  of  present  economic  life  to  discard  the  definition  of  welfare 
and  human  progress  proffered  by  Adam  Smith. 

We  must  turn,  therefore,  to  another  school  of  thought  in  order  to  get 
the  perspective  that  alone  will  make  rising  costs  of  living  intelligible. 

The  modern  dynamic  view  of  society7  does  not  emphasize  competition 
but  monopoly,  not  land  but  human  industry,  not  savings  but  betterment 
of  person  and  capital-goods,  not  conflict  between  income-classes  con- 
ceived as  so  many  non-communicating  compartments,  but  harmonious 
interests  among  social  groups,  not  falling  prices  but  rising  prices  in  one 
respect,  or  a  shifting  of  high  and  low  prices  in  another.  The  dynamic 
economist  stresses  differentials  of  personality  and  places  them  alongside 
of  natural  monopolies  as  the  foundation  of  a  surplus  which  goes  to 
enterprise,  but  gradually  to  everybody.  Invention  gives  extra  profits. 
Personal  superiorities  lead  to  the  same  result.  They  render  prices  inde- 
pendent of  costs  of  production,  and  through  special  means  of  control 
effect  a  concentration  of  wealth.  But  with  a  concentration  of  the  tech- 
nical means  of  production  appears  an  enlarged  aggregate  income.  All 
share  in  it  at  last  because  no  other  outlet  for  its  consumption  exists. 
Profits  thus  are  a  blessing  because  they  facilitate  further  improvements. 
Besides,  the  consumer  limits  monopoly-powers  by  his  own  powers  of  sub- 

7  See  especially  Patten,  S.  N.,  The  Theory  of  Prosperity,  1902;  "The  Reconstruction 
of  Economic  Theory,"  1911,  in  Annals  of  the  American  Academy  of  Political  and  Social 
Science,  Supplement,  Nov.  1912  "The  Conflict  Theory  of  Distribution,"  in  Yale  Re- 
view, 1908. 


4  RISING  COSTS  OF  LIVING 

stituting  one  article  for  another  when  prices  advise  it,  and  because  wants 
ever  outstrip  productivity.  This  being  so,  wants  and  productivity  are 
mutually  interacting.  By  the  one  the  efficiency  of  the  marginal  worker 
is  raised;  by  the  other  a  new  want  is  stimulated.  Through  improvement 
of  the  Self  and  of  capital-goods  values  go  up. 

What  is  more,  the  shares  of  labor  and  capital  are  increasingly  blended. 
Instead  of  separate  funds  for  three  or  four  factors  of  production  we  get 
many  overlapping  social  budgets.  The  gains  of  the  monopolist  are 
socialized  into  common  benefits.  The  marginal  wage  is  upheld  by  the 
supramarginal. 

Lastly,  prices  maintain  themselves  in  a  double  sense.  They  rise  with 
progress  because  wants  are  satisfied  by  better  products,  and  themselves 
are  put  on  a  higher  plane.  The  units  of  value  which,  balanced  against 
each  other,  mean  prices  are  thus  enlarged.  At  the  same  time  prices 
cannot  fall,  chiefly  because  monopoly  is  a  permanent  fixture  in  a  dyn- 
amic society.  One  kind  will  supersede  another.  Land  and  entre- 
preneur rents  continually  arise  and  disappear  in  this  field  or  that,  ac- 
cording to  changes  in  technique  and  ideals.  But  generically  they  must 
endure.  Hence  prices  and  costs  will  tend  to  go  apart  rather  than  to 
coincide.  There  can  be  no  sinking  of  the  general  price-level,  but  only 
a  rise  of  prices  in  units  of  goods,  or  a  shifting  of  high  and  low  prices 
measured  by  coin. 

The  essential  thing,  then,  is  changes  in  costs  of  production  and  wants. 
These  bring  qualitative  and  quantitative  changes  in  supply  for  individuals 
or  society  at  large.  But  with  them  incomes  will  be  redistributed  at  all 
times,  though  most  so  in  transitions.  Costs  of  living  thus  become  a  sign 
of  social  progress  rather  than  of  retrogression.  They  do,  in  the  broadest 
sense,  mean  a  boon,  however  trying  the  processes  of  adjustment  to  some. 

In  the  spirit  of  this  philosophy  the  following  pages  attempt  to  treat 
four  main  topics,  namely  (1)  the  changes  of  supply  in  goods  and  services 
during  the  last  quarter  century;  (2)  cost-aspects  of  supply,  with  the  under- 
standing, however,  that  costs  do  not  explain  all  prices;  (3)  price-move- 
ments by  groups  of  goods,  wholesale  and  retail;  and  (4)  the  redistribution 
of  incomes  from  services  and  property.  A  distinction  between  total 
supplies  and  particular  incomes  is  necessary,  for  while  the  one  measures 
productivity,  the  other  reflects  valuations.  Together  they  will  help 
us  to  understand  the  problem  as  Americans  have  felt  it,  to  get  at  the 
fundamental  causes,  and  to  correlate  incidentally  economic  fact  and 
theory. 


PART  I.     PRODUCTION 
Chapter  I  —  Changes  in  Supply 

I.  Production  of  Materials.  The  word  "supply"  may  refer  to  two 
different  things  according  to  what  we  desire  to  explain.  There  is  supply 
in  the  sense  of  natural  resources  from  which  all  goods  spring,  and  there  is 
the  supply  of  these  goods  themselves.  It  is  obvious  that  the  two  are 
intimately  related  and  that  every  country  depends  upon  one  for  the  other. 
For  the  world  at  large  no  alternative  exists.  Yet  we  cannot  determine 
the  exact  nature  of  economic  goods  produced  at  any  one  time  until  we 
examine  them  as  such,  for  out  of  raw  materials  many  varieties  of  articles 
may  be  fashioned.  The  stuff  nature  gives  us  is  fixed  in  quantity  and 
kind.  We  cannot  turn  iron  into  marble,  or  timber  into  water-power. 
But  the  form  and  uses  of  each  are  at  our  option.  Out  of  iron  all  sorts  of 
commodities  are  producible,  and  with  grain  or  cotton  a  long  array  of 
physically  necessary,  ornamental,  or  socially  injurious  goods  may  be 
turned  out.  What  is  more,  the  final  products  may  satisfy  different  in- 
come-groups, or,  again,  become  purely  a  service  rendered  by  government 
on  behalf  of  the  nation  at  large.  Hence,  what  concerns  us  most  at  the 
outset  is  not  the  supply  of  natural  bounties,  but  rather  that  of  the  material 
services  drawn  from  them  and  marking  the  scope  and  character  of  our 
economic  enjoyments. 

Now,  in  this  respect  a  remarkable  change  took  place  since  1890. 
Prior  to  that  date  America  produced  a  superabundance  of  agricultural 
stuffs,  but  nothing  else  nearly  so  much.  For  instance,  between  1870  and 
1890  the  population  grew  62%,  the  number  of  bread-earners  in  agri- 
culture 55%,  the  acreage  of  faim-lands  in  general  about  the  same,  but 
that  of  improved  farms  94%,  and  the  stock  of  farm  animals  even  more.1 
All  prices  fell  previous  to  1895,  but  farm  products  especially  so.  The 
average  man's  food  supply  probably  never  had  been  so  great.  Labor 
in  farm  and  forest  gave  the  richest  returns,  and  national  wealth  in- 
creased in  proportion.     But  gradually  there  came  a  change. 

The  surplus  of  energy  and  goods  found  an  outlet  in  industry.  For- 
eign trade  furnished  the  technical  means  of  machinofacture  quickly, 
besides  stimulating  a  flow  of  capital  from  Europe  to  the  New  World. 
Thus  national  development  was  secured  on  a  grander  scale  than  ever, 
but  with  some  novel  effects. 

1  Abstract  of  Census  of  1910,  pp.  281,  282.  See  also  Census  1910,  vol.  4,  p.  41, 
and  Statistical  Abstract,  1911,  pp.  732-33. 


0  RISING  COSTS  OF  LIVING 

During  the  period  1890  to  1910  our  population  increased  47%,  its 
wealth  at  least  150%,  imports  over  100%,  exports  140%,  while  still  more 
impressive  gains  were  registered  in  industrial  output,  bank- clearings, 
railroading,  etc.2  Expressed  in  dollars  and  cents,  then,  the  social  divi- 
dend rose  to  figures  never  heard  of  before.  But  the  crucial  fact  is,  first, 
that  measured  by  weight  and  volume  production  grew  also,  and  secondly 
that  not  all  classes  of  goods  gained  equally.  Indeed,  it  is  not  enough 
merely  to  know  that  the  total  output  of  stuffs  was  doubled  within  a 
score  of  yeais.3  More  significant  is  the  relative  movement  of  goods,  tan- 
gible and  intangible,  the  ascendancy  of  some  and  the  decline  of  others, 
in  brief  a  change  of  ratios  between  the  principal  groups  of  goods.  Mo- 
mentous in  consequences  was  the  comparative  decline  of  agriculture, 
the  gain  of  industry  and  mining,  and  a  yet  more  startling  extension  of 
personal  services. 

To  satisfy  ourselves  on  this  point  by  a  few  figures: 

Between  the  triennials  1889-1891  and  1910-1912  the  output,  in  weight, 
of  lead  increased  192%,  of  pig-iron  230%,  of  zinc  316%,  copper  334%, 
phosphate  rock  446%,  coal  (both  kinds)  300%,  petroleum  400%,  cement 
900%,  and  aluminum  several  thousand  percents.4  For  earlier  years  the 
percentage  gain  had  been  slightly  greater,  but  the  absolute  gain  not 
anywhere  near  as  great.  However,  this  industrial  advance  is  most 
striking  when  compared  to  a  growth  of  population  of  47%,  of  75%  in  the 
number  of  gainfully  occupied  in  manufactures,5  of  140%  in  the  value  of 
aggregate  products,6  and  of  200%  in  invested  capital.7 

If  we  follow  statistics  on  occupations  as  classified  by  the  federal 
Census  Office  we  find  that  manufactures  and  mechanical  pursuits  in 
1890  account  for  24.4%  of  all  "gainfully  occupied,"  i.e.,  those  sup- 
porting themselves  chiefly  from  money  earnings,  and  for  28.3%  in 
1910.8  For  transportation,  trade,  the  professions,  and  personal  and 
domestic  services  the  precentages  are  respectively  36.4  and  38.7;  or, 
stating  them  with  regard  to  the  entire  population,  13.5%  and  16. 1%.9 
The  number  of  agriculturally  employed  fell  in  proportion. 

2  Statistical  Abstract,  1913. 

3  See  Table  4,  p.  12. 

4  Statistical  Abstract,  1913,  pp.  663-65. 
6  Abstract  of  Census  of  1910,  p.  439. 

6  Census  of  1910,  vol.  5,  pp.  32-33. 

7  Ibidem. 

8  Census  for  1910,  vol.  4,  p.  41. 

*  Ibidem.  For  a  criticism  on  classifications  see  Am.  Econ.  Rev.,  March  1915. 
For  a  reply  to  criticisms  ibidem,  Sept.  1915. 


PRODUCTION 


Any  output  for  a  given  period  may,  however,  be  pronounced  suf- 
ficient or  insufficient  by  several  standards.  It  depends  on  what  we  have  in 
mind.  Thus  to  say  that  agricultural  production  was  doubled  is  one  thing; 
to  compare  it  with  developments  in  other  fields  a  second;  and  to  relate  it 
to  population  a  third.  One  must  decide  which  criterion  is  to  be  adopted. 
For  present  purposes  evidently  nothing  is  so  important  as  a  per  capita 
supply.  It  is  what  the  average  man  would  get  at  two  different  dates 
that  concerns  us,  provided  distributive  principles  remained  constant. 
Hence  movements  in  population  must  never  be  lost  sight  of. 

The  output  of  different  kinds  and  groups  of  goods  is  best  measured 
by  reducing  all  unit-measures  to  a  common  standard  such  as  the  pound. 
Granted  that  the  same  goods  have  very  different  practical  values  accord- 
ing to  the  uses  made  of  them,  and  that  they  vary  infinitely  in  make-up 
and  qualities,  such  a  quantitative  comparison  is  here  indispensable. 
Nor  will  the  results  be  far  from  correct  so  long  as  the  same  rates  of 
conversion  are  applied  uniformly  to  all  years.     This  is  done  in  Table  1. 

TABLE  1 
PRODUCTION  IN  AGRICULTURE  FOR  1890  AND  1910 

Triennial  Averages 


Producec 

I  in  Mil- 

Pounds 

Produced  in 

Percentage 

Product 

Unit 

lions 

per 

Billions  of  pounds 

Increase 

1890 

1910 

Unit 

1890 

1910 

Cereals 

Bushel 

3017 

4920 

50 

150.8 

246 

62.8% 

Tobacco 

Pound 

475 

1000 

1 

0.5 

1 

110% 

Potatoes 

Bushel 

231 

333 

60 

13.8 

20 

44.2% 

Hay  and  For- 

age  

Ton 

66.8 

97  A 

2000 

133.6 

195 

45  .8% 

Cotton 

Bale 

7.2 

12.8 

500 

3.6 

6.4 

78% 

Cotton  seed... 

Ton 

3.8 

5.5 

2000 

7.6 

11 

44.8% 

Butter  and 

Cheese 

Pound 
Gallon 
Pound 
Bushel 
Pound 

1460 
5200 

295 
13 

568 

1940 

5800 

307 

20.6 
1752 

1 

8 

1 

50 

1.5 
41.6 
0.3 
0.6 
0.6 

1.9 
46.4 
0.3 
1 
1.8 

32  .7% 

Milk 

11.5% 

Wool 

4% 

Flaxseed 

55% 

Sugar 

208% 

354.5 

530.8 

50% 

Milk  Cows 

Heads 

15.6 

21.4 

37% 

Other  Cattle... 

Heads 

35.9 

45.5 

26 .4% 

Hogs  and 

Sheep 

Heads 

94.5 

111.5 

18% 

References:  Statistical  Abstract  for  1913,  and  Census  of  1910,  Vol.  5. 


8 


RISING  COSTS  OF  LIVING 


All  standard  measures  such  as  the  bushel  or  gallon  or  ton  have  been 
converted  into  pounds  of  sixteen  ounces,  the  amounts  representing  tri- 
ennial averages  for  the  large  majority  of  goods.  Individual  items  have 
further  been  added  up  to  make  a  grand  total  so  that  for  the  period  1889 
to  1909  the  increase  could  be  given  in  percentages. 

The  table  shows  that  the  aggregate  supply  kept  pace  with  population. 
But  this  increase  of  the  total  covers  up  some  details  of  peculiar  signi- 
ficance. Thus  the  greatest  gain  was  made  by  crops  that  either  do  not 
figure  prominently  among  our  domestic  products,  or  else  do  not  count 
as  foods.  Rice  is  an  example  of  the  first  kind,  and  tobacco  of  the  second. 
Sugar,  it  is  true,  ranks  high  both  as  food  and  in  the  list  of  home  products, 
but  nonetheless  one-half  of  what  we  consume  comes  from  abroad. 

Another  point  is  the  relative  decline  of  some  cereals  which  might  or 
do  form  a  mainstay  of  the  family  table.  The  production  of  wheat,  for 
instance,  grew  only  39%,  and  that  of  rye  only  20%.  For  oats  and  corn 
the  gains  are  respectively  86%  and  79%,  but  much  of  it  went  to  the  fat- 
tening of  live  stock  which  could  not  be  supported  by  natural  grazing  as 
in  former  days.  Cultivation  encroached  more  and  more  on  free  pas- 
tures, so  that  meat-animals  and  notably  also  dairy  cows  had  to  be  stall- 
fed.  At  the  same  time  the  supply  of  meat  did  not  increase  proportionate 
to  population. 

We  have  hence  a  shrinkage  of  foods,  even  though  none  for  agri- 
culture as  a  whole.  This  is  true  of  the  two  decades  since  1890,  but  it 
applies  more  strongly  to  the  last  census  decade  1899  to  1909.  Table  2 
shows  that  during  those  years  the  population  grew  21%,  but  total  output 

TABLE  2 
AGRICULTURAL  PRODUCTION  1899-1909 


Product 

Unit 

Product 

Millions 

1899 

ion  In 
of  Unit 
1909 

Pounds 
per  Unit 

Production  in 
Pounds  (Billions) 
1899         1909 

Cereals 

Bushel 
Bushel 

Ton 

Pound 

Pound 

Bushel 

Bushel 

Quart 

4439 
515 

91 
5635 
152 
316 
212.4 
463 

4513 
643 

109.3 
6380 
127 

448 

214.7 

427 

50 

45 

2000 

1 

1 

60 

50 

1.5 

222 
23 

182.2 
5.6 
0.15 

19 

10.6 
0.7 

226 

Other  Grains  and  Seeds 
Sugar,  Hay  and  Cot- 
ton Seed 

29 
218.6 

Cotton,  Tobacco 

6.4 

Minor  Crops 

0.27 

Potatoes 

26.9 

Fruit 

10.7 

Berries 

0.64 

Total 


463  .2        518  .5 


PRODUCTION  9 

only  11%.  The  number  of  milch  cows  increased  probably  about  20%, 
and  that  of  other  live  stock  less.  Correspondingly  dairy  products  are 
falling  off,  while  the  supply  of  meats  is  curtailed.  Cereals,  fruits,  and 
berries  show  up  poorly.  Forage  crops  (silage,  hay)  and  cotton  hold  their 
own.     Sugar  and  potatoes  even  gain  relatively,  but  such  are  exceptions. 

We  may  conclude,  therefore,  that  the  supply  of  meats,  dairy  products, 
and  important  cereals  went  down  steadily,  the  decline  being  most  marked 
after  1900.  This  it  is  the  safer  to  say  since  the  years  1899  and  1909  were 
both  fairly  normal.  But  for  that  matter  it  follows  from  other  facts.  The 
shrinkage  came  inevitably  since  acre-yields  rose  but  very  little,10  because 
the  acreage  of  improved  lands  gained  less  than  five  per  cent,  the  number 
of  farm-workers  remaining  approximately  stationary,11  and  because  of 
changes  in  the  area  covered  by  the  main  crops.  In  1899  the  cereals  covered 
65.3%  of  the  acreage  under  cultivation;  in  1909  only  61.5%.  Wheat 
shows  the  greatest  loss,  then  corn.  Oats,  cotton,  vegetables,  and  fodders 
gained.12  Truck-gardening  became  most  popular  in  the  East,  within 
the  pale  of  big  cities  and  perfected  transportation  systems.  The  national 
domain  was  more  sparingly  parcelled  out  to  seekers  of  homesteads  at  the 
very  moment  when  demand  for  them  reached  its  height.13 

Foreign  trade  was  bound  to  reflect  this  pressure.  For  one  thing  old 
ratios  of  imports  and  exports  of  foods,  raw-stuffs,  and  manufactures 
were  upset.  For  another,  exports  comprised  decreasingly  cereals  and 
animal  products.  In  1900  our  food-output  was  valued  at  81,900,000,000 
of  which  28.7%  was  exported.  But  in  1910  it  had  dwindled  to  10.8%.14 
In  1890  foods  exported  in  excess  of  food-imports  still  amounted  to 
§96,000,000;  by  1911  to  less  than  $32,000,000  in  spite  of  a  strong  rise  of 
prices.15  Or  to  put  the  situation  another  way:  Since  1890  the  value  of 
food-imports  grew  three  times  as  fast  as  exports.  The  opulence  of  the 
American  people  is  exemplified  in  these  facts.  For  primary  necessities 
and  machinofactures  we  were  able  to  buy  huge  quantities  of  cocoa,  sugar, 
coffee,  tea,  alcoholic  beverages,  delicatessen,  and  so  on.  Our  productive 
powers  exceed  the  European  so  much  that  luxuries  form  a  greater  part  of 
our  imports  than  elsewhere,  even  discounting  differences  of  home  pro- 
duction.    But  on  the  other  hand  the  positive  decline  of  food-exports 

10  Census  for  1910,  vol.  5. 

11  Ibidem,  pp.  534-35,  and  570.    Abstract  of  Census  for  1910,  p.  265. 

12  Census  for  1910,  vol.  5,  p.  533. 

13  Statistical  Abstract  for  1913,  p.  19. 

14  Ibidem,  Tables  234  and  236.    Statistical  Abstract  for  1911,  pp.  702-52. 
16  Ibidem. 


10  RISING  COSTS  OF  LIVING 

shown  in  Table  3  portended  nothing  good.  The  export  of  oats  fell  from 
five  million  bushels  in  1890  to  one  and  a  half  millions  in  1911 ;  that  of  rye 
from  six  millions  to  nothing;  that  of  wheat  from  165,000,000  bushels  to 
not  quite  a  hundred  million.16  Exports  of  butter  dropped  to  one-fourth 
of  former  years.  Cheese  and  flaxseed  not  only  vanished  in  the  export 
list  but  appear  among  imports.  Barley  and  eggs  alone  form  a  growing 
percentage.  Meats  reckoned  in  dollars  and  cents  increase  somewhat,  but 
in  view  of  price  movements  apparently  rather  than  genuinely.  Further- 
more, imports  of  wool,  hides,  and  hay  went  up  at  a  rapid  rate. 

For  all  that,  these  changes  in  our  foreign  trade  could  not  restore  the 
old  balance  of  supplies.  The  final  and  summary  effect  of  readjustments 
of  demand  and  supply  is  shown  in  Table  4  which  contains  the  principal 
products  of  agriculture,  mining,  forestry,  and  machinofacture  in  1890 
and  1910.  Again,  as  on  a  former  occasion,  the  items  have  been  reduced 
to  pounds  in  order  to  obtain  a  comparative  viewpoint.  This  is  the  more 
serviceable  since  with  the  exception  of  natural  gas,  building  stones  (natu- 
ral), fish  and  very  trifling  items  all  quantities  are  calculated  by  the  fed- 
eral census.17  We  are  thus  in  a  position  to  take  inventory,  as  it  were,  of 
the  national  stock,  of  its  main  elements  and  of  the  trend  of  production 
during  the  period  of  rising  prices.  Long  ago  Ruskin  in  his  quaint 
economic  essay  dwelt  on  the  importance  of  knowing  "what  quantity  of 
each  article  composing  the  store  [of  nations]  exists  in  proportion  to  the 
real  need  for  it  by  the  population."18  We  cannot  easily  fix  the  actual 
needs  of  people,  particularly  since  the  primary  needs  have  ceased  to  fill 
our  bill  of  consumption.  A  surplus  economy  does  not  bother  about  such 
minima;  it  turns  more  on  the  secondary  wants,  on  the  comforts  and  luxu- 
ries. But  nonetheless  the  materials  of  a  rising  level  of  living  must  in- 
terest us,  for  they  lie  at  the  very  core  of  costs  of  living. 

Now,  the  facts  are  these:  in  1889  foods  comprised  32%  of  the  national 
output;  in  1909  17.3%.  Hay  and  tobacco  contributed  respectively 
17.7%  and  11.6%,  the  rest  being  products  not  for  either  internal  con- 
sumption of  man  or  the  feeding  of  live  stock.  Among  foodstuffs,  meats, 
wheat,  rye,  and  dairy  products  preeminently  are  on  the  decline.  Forage 
and  orchard  crops  fell  off  slightly,  wool  and  hides  much  more,  while  the 

18  Statistical  Abstract  for  1913. 

17  Ibidem. 

18  Ruskin,  M unera  Pidveris,  p.  39.  See  also  Hobson,  Work  and  Wealth,  p.  32: 
"A  pecuniary  statement  of  the  National  Dividend  which  contains  no  information  as 
to  the  nature  of  the  goods  and  services  comprising  it  may  be  repudiated  out  of  hand  as 
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12  RISING  COSTS  OF  LIVING 

supply  of  lumber,  corn,  oats,  potatoes,  sugar,  rice,  and  cotton  increased 
faster  than  population.  Yet  in  1889  cereals,  meat  and  milk  constitute 
29%  of  the  total,  in  1909  only  15%. 

The  selection  of  single  instead  of  a  series  of  years  weakens  the  force  of 
our  argument.  This  cannot  be  gainsaid.  If,  for  instance,  triennial 
averages  are  taken  the  standing  of  agriculture  improves,  as  foods  would 
then  form  respectively  28.9%  and  18.3%  of  the  aggregate  sums.19  Also, 
the  latter  themselves  would  show  a  gain  of  150%  as  compared  to  the 
smaller  gain  indicated  on  Table  4.  On  the  other  hand,  since  the  figures 
for  minerals,  too,  would  have  to  be  raised  the  percentages  are  really 
affected  less  than  appears  at  first  sight.  Thus  we  can  hardly  be  in  doubt 
as  to  the  general  fact:  Agriculture  took  decidedly  second  rank  to  industry, 
for  between  1889  and  1909  the  latter  increased  228%.  Coal,  iron,  and 
petroleum  come  first,  and  lumber  second  at  a  considerable  distance.  As 
to  the  product  of  fisheries  we  know  that  it  gained  scarcely  20%,  in 
spite  of  higher  prices  paid  especially  after  1900.  Fish,  like  other  foods, 
form  a  shrinking  part  of  our  national  income.20 

Suppose  we  try  now,  in  the  last  place,  to  divide  products  into  "fixed" 
and  "circulating"  capital  so  as  to  be  able  to  contrast  quantitative 
changes  later  on  with  changes  in  value.  John  Stuart  Mill  among  other 
writers  has  called  our  attention  to  the  need  of  a  continuous  round  of  pro- 
duction and  consumption  measurable  by  the  year.  He  tells  us  that 
"the  greater  part  in  value  of  the  wealth  now  existing  in  England  has  been 
produced  by  human  hands  within  the  last  twelve  months.  A  very 
small  proportion  indeed  of  that  large  aggregate  was  in  existence  ten 
years  ago."21  Hence  the  necessity  of  continuous,  recurrent  effort,  and 
hence — by  way  of  practical  application — the  paramount  importance  of 
right  principles  of  taxation.22 

Whether  on  Mill's  static  premises  a  constant  ratio  of  surplus  to  total 
production  was  implied  need  not  here  detain  us.  But  it  is  instructive 
that  what  he  said  about  values  in  general  applies  also  to  our  physical  quan- 
tities since  1890.  This  is  brought  out  by  Table  4.  If  namely  in  confor- 
mity with  modern  usage  we  call  such  goods  circulating  as  admit  of  a 

18  Statistical  Abstract  for  1913. 

10  Bureau  of  Census,  "Fisheries  of  the  U.  S.,"  1911,  p.  10. 

21  Mill,  Principles  of  Political  Economy,  Book  I,  ch.  5,  section  6. 

12  Ibidem,  section  8. 


TABLE  4 

Production  of  Main  Groups  of  Circulating  and  Fixed  Capital,  1889  and  1909 

(Physical  Quantities.    All  Measures  Reduced  to  Pounds  at  Indicated  Rates) 

A .     Circulating  Capital 


Article 


Cereals 

Meats 

Milk 

Butter  and  Cheese. 

Sugar 

Molasses 

Rice  (Clean) 

Hops 

Poultry 

Eggs 

Potatoes 

Orchard  Products... 
Peas,  Beans 


Hay  and  Forage. 

Wool 

Cotton 

Cottonseed 

Flaxseed 

Hemp 

Tobacco 

Salt 

Petroleum 

Coal 


Standard 
Measure 


Bushel 

Pound 

Gallon 

Pound 

Pound 

Gallon 

Pound 

Pound 

Head 

Dozen 

Bushel 

Bushel 

Bushel 

Ton 

Pound 

Bale 

Ton 

Bushel 

Ton 

Pound 

Barrel 

Barrel 

Ton 


Reckon'd 

at 
Pounds 


50 

1 

8 

1 

1 

12 

1 

1 

3.6 

1.5 

60 

50 

40 

2,000 

1 

500 

2,000 

40 

2,000 

1 

280 

300 

2,240 


Total  Circulating  Goods  (roughly) 

All  Foods 

Hay,  Salt,  Cottonseed,  Tobacco 


Millions  of  Pounds 
1889  1909 


176 ,450 

12  ,000 

41 ,600 

1,460 

301 

300 

129 

39 

1,000 

1,230 

15  ,660 

0,940 

0,360 

133  ,600 
0,191 
3,550 
3,600 
0,410 
0,023 
0,488 
2,240 
10 ,500 

282  ,240 


688  ,000 
252  ,000 
140  ,000 


222  ,500 

14 ,700 

46 ,400 

1,950 

1,681 

500 

507 

41 

1,760 

2,400 

26 ,880 

1,075 

0,740 

194 ,900 
0,255 
5,325 

10 ,600 
0,780 
0,075 
1,056 
8,428 

54 ,960 
1 ,034 ,880 


1 ,632  ,000 
320 ,000 
215  ,000 


B.     Fixed  Capital 


Lumber 

Pig  Iron 

Lead  and  Zinc 

Copper,  Aluminum,  Nickel. 

Silver  and  Gold 

Lime 

Cement 


M-Feet 

3,000 

Ton 

2,240 

Ton 

2,000 

Pound 

1 

Ounce 

1-16 

Barrel 

150 

Barrel 

380 

70 ,000 
17  ,000 
0,484 
0,232 
0,003 
10,275 
2,660 


120 ,000 
57  ,800 
1,186 
1,130 
0,004 
7,000 
25  ,346 


Total  Fixed  Capital 
Percentage  of  Circulating  Goods  on  Total  Production: 

Percentage  of  Foodstuffs  on  Total 

Percentage  of  Goods  indirectly  for  Food,  on  Total 

Note:  Omitted  Goods:  Natural  gas;  building  stone;  fish;  and 


101 ,000 

212  ,000 

87  .1% 

88  .4% 

32    % 

17  .3% 

17  .7% 

11.6% 

inor  items. 

14  RISING  COSTS  OF  LIVING 

single  or  transient  use  only,  such  as  foods,  fodder,  tobacco,  plant-fibers, 
wool,  coal  and  petroleum,  then  the  remainder,  representing  fixed  capital, 
constitute  but  one-tenth  of  the  grand  total  both  in  1890  and  1910.23  In 
other  words,  while  the  various  constituents  of  each  class  of  capital  have 
changed  their  relative  positions  the  surplus  has  not;  certainly  not  in  a 
perceptible  degree.  Goods,  we  may  infer,  are  replaced  at  a  more  or  less 
constant  rate,  whether  they  satisfy  primary  or  secondary  needs,  whether 
foods  are  in  the  ascendant  or  commodities,  production-goods  or  direct 
utilities.  It  may  be  highly  significant  for  certain  groups  of  people  that 
coal  and  cotton  displace  cereals  or  wool,  and  that  stuff  is  discarded  rather 
than  worn  out,  but  the  net  result  is  always  a  displacement,  not  an  accre- 
tion of  goods.  The  more  dynamic  the  age  the  greater  the  velocity  of 
circulation.     This  seems  to  be  the  upshot  of  the  matter. 

Any  number  of  data  might  further  be  cited  to  illustrate  this  point, 
but  a  few  will  suffice  since  they  may  be  considered  symptomatic  of  the 
general  trend. 

Thus  we  know  that  the  per  head  consumption  of  meat  declined,24 
that  of  corn,  wheat,  sugar,  tea  and  malt  liquors  increasing  but  moder- 
ately, while  that  of  coal,  iron,  silk,  rubber,  musical  instruments,  lighting 
fixtures,  paper,  sporting  goods,  "soft  drinks,"  and  (presumably)  linoleum 
and  oilcloth  went  up  enormously.25  Figure  1  is  designed  to  show  the 
relative  gain  of  each,  quantities  being  selected  wherever  feasible  with 
due  regard  for  exports  and  imports.  Where  values  are  compared  price- 
rises  will  reduce  differences  slightly. 

It  appears  that  the  change  in  demands  is  particulary  marked  since 
1900.     For  instance,  the  value-output  of  confectionary  increased  140%, 

23  Definitions  of  Fixed  and  Circulating  Capital  have  changed  several  times  in 
the  history  of  economic  thought.  Smith  understood  "Fixed"  to  mean  capital  em- 
ployed in  the  improvement  of  land,  the  purchase  of  useful  machines,  etc.,  so  as  to  yield 
a  profit  "without  changing  masters."  {Wealth  of  Nations,  Book  2,  chap.  1).  Ricardo 
and  Mill  meant  by  it  goods  admitting  of  multiple,  repeated  uses  and  employed  for 
further  (price)  production.  The  idea  of  fixed  capital  as  goods  capable  of  bearing  re- 
peated uses,  without  consideration  of  exchange  or  production,  dates  from  the  rise  of 
psychological  thought. 

24  Report  of  Bureau  of  Animal  Industry,  Dep't  of  Agriculture,  for  the  years 
1905  and  1911,  respectively,  p.  283,  and  p.  260. 

26  These  and  subsequent  data  have  been  taken  from  Statisical  Abstracts  for  the 
years,  1911,  1912,  and  1913. 


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PRODUCTION  15 

of  canned  fish  177%,  of  canned  vegetables  220%,  flavoring  extracts 
240%,  men's  furnishings  192%,  women's  clothing  466%,  oilcloths  323%, 
cash-registers  and  calculating  machines  410%,  plumbers'  supplies  264%, 
dentists'  supplies  191%,  typewriters  447%,  refrigerators  140%,  fancy- 
paper  boxes  194%,  printing  and  publishing  125%,  patent  medicines 
156%,  druggist  preparations  557%,  perfumery  and  cosmetics  200%, 
silverware  135%,  artificial  ice  760%,  fur  goods  200%,  jewelry  86%,  choco- 
lates 136%,  corsets  130%,  photographic  apparatus  189%,  and  of  auto- 
mobiles and  trucks  some  5,000%. 26  We  must  repeat:  Price-rises  account 
for  the  least  of  this  expansion.  Changes  in  foreign  trade  to  be  sure  make 
some  deductions  necessary;  and  the  unequal  accuracy  of  statistics,  of 
course,  tends  to  exaggerate  the  development.  But  with  all  requisite  al- 
lowances the  general  fact  of  unprecedented  qualitative  changes  in  demand 
still  remains.  This  is  the  cardinal  fact,  not  the  exactness  of  our  calcu- 
lations. It  speaks  volumes  that  during  the  score  of  years  under  review 
the  per  capita  consumption  of  manufactures  increased  from  $133  to 
$221,  while  that  of  agricultural  produce  shows  virtually  no  advance.27 

II.  Services.  The  non-material  services  were  multiplied  even  faster 
than  those  embedded  in  industrial  commodities.  Railroads,  e.g.,  in- 
creased their  ton-mileage  by  150%  between  1890  and  1910,28  traction  com- 
panies their  traffic  since  1902  by  100%.29  Telephone  companies  tripled 
their  turn-over,  and  central  fight  and  power  stations  nearly  quad- 
rupled it.30 

Not  less  telling  is  the  extension  of  personal  services,  for  by  their  prog- 
ress the  course  of  material  productivity  may  be  gauged,  just  as  in  turn 
they  promote  it  and  help  to  raise  the  general  level  of  living.  One  may 
say,  the  greater  in  a  community  the  body  of  workers  providing  place- 
utilities  or  catering  directly  to  personal  wants,  the  higher  the  type  of 
economic  civilization  we  are  dealing  with,  the  wider  the  margin  for  non- 
necessities,  and  the  ampler  the  income  of  that  society  as  a  whole. 

The  progress  of  science  during  this  era  is  indicated  by  the  growing 
number  of  vocations,  that  is  by  increased  specialization.  This  spirit  of 
research  lies  back  of  the  fact  that  since  1880  the  number  of  archi- 
tects and  designers  increased  920%,  of  engineers  and  electricians 
2,370%,  of  chemists  and  metallurgists  700%,  of  operatives  in  rubber  fac- 

*  Ibidem. 

27  Census  of  1910,  vol.  5,  p.  35. 

38  Statistical  Abstract  for  1911,  p.  288. 

28  Market  World  and  Chronicle,  issue  of  April  10,  1915. 
80  Ibidem. 


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PRODUCTION  15 

of  canned  fish  177%,  of  canned  vegetables  220%,  flavoring  extracts 
240%,  men's  furnishings  192%,  women's  clothing  466%,  oilcloths  323%, 
cash-registers  and  calculating  machines  410%,  plumbers'  supplies  264%, 
dentists'  supplies  191%,  typewriters  447%,  refrigerators  140%,  fancy- 
paper  boxes  194%,  printing  and  publishing  125%,  patent  medicines 
156%,  druggist  preparations  557%,  perfumery  and  cosmetics  200%, 
silverware  135%,  artificial  ice  760%,  fur  goods  200%,  jewelry  86%,  choco- 
lates 136%,  corsets  130%,  photographic  apparatus  189%,  and  of  auto- 
mobiles and  trucks  some  5,000%. 26  We  must  repeat:  Price-rises  account 
for  the  least  of  this  expansion.  Changes  in  foreign  trade  to  be  sure  make 
some  deductions  necessary;  and  the  unequal  accuracy  of  statistics,  of 
course,  tends  to  exaggerate  the  development.  But  with  all  requisite  al- 
lowances the  general  fact  of  unprecedented  qualitative  changes  in  demand 
still  remains.  This  is  the  cardinal  fact,  not  the  exactness  of  our  calcu- 
lations. It  speaks  volumes  that  during  the  score  of  years  under  review 
the  per  capita  consumption  of  manufactures  increased  from  $133  to 
$221,  while  that  of  agricultural  produce  shows  virtually  no  advance.27 

II.  Services.  The  non-material  services  were  multiplied  even  faster 
than  those  embedded  in  industrial  commodities.  Railroads,  e.g.,  in- 
creased their  ton-mileage  by  150%  between  1890  and  1910,28  traction  com- 
panies their  traffic  since  1902  by  100%.29  Telephone  companies  tripled 
their  turn-over,  and  central  light  and  power  stations  nearly  quad- 
rupled it.30 

Not  less  telling  is  the  extension  of  personal  services,  for  by  their  prog- 
ress the  course  of  material  productivity  may  be  gauged,  just  as  in  turn 
they  promote  it  and  help  to  raise  the  general  level  of  living.  One  may 
say,  the  greater  in  a  community  the  body  of  workers  providing  place- 
utilities  or  catering  directly  to  personal  wants,  the  higher  the  type  of 
economic  civilization  we  are  dealing  with,  the  wider  the  margin  for  non- 
necessities,  and  the  ampler  the  income  of  that  society  as  a  whole. 

The  progress  of  science  during  this  era  is  indicated  by  the  growing 
number  of  vocations,  that  is  by  increased  specialization.  This  spirit  of 
research  lies  back  of  the  fact  that  since  1880  the  number  of  archi- 
tects and  designers  increased  920%,  of  engineers  and  electricians 
2,370%,  of  chemists  and  metallurgists  700%,  of  operatives  in  rubber  fac- 

"  Ibidem. 

27  Census  of  1910,  vol.  5,  p.  35. 

28  Statistical  Abstract  for  1911,  p.  288. 

28  Market  World  and  Chronicle,  issue  of  April  10,  1915. 
80  Ibidem. 


16  RISING  COSTS  OF  LIVING 

tories  620%,  and  of  plumbers  and  gas-fitters  740%.31  Directly  or  indi- 
rectly inventions  fostered  by  scientific  inquiry  have  necessitated  this 
growing  host  of  industrial  servants. 

But  like  increases  in  the  field  of  trade  and  transportation  reflect,  on  the 
one  hand,  the  bearing  of  large-scale  production  on  the  exchange-mechan- 
ism, and  on  the  other,  the  multiplication  of  wants  in  the  wake  of  tech- 
nical improvements.  In  a  sense,  wants  grow  faster  than  productivity! 
Thus,  while  the  population  (since  1880)  increased  80%,  the  number  of 
gainfully  occupied  actors  and  showmen  increased  840%,  that  of  boarding 
and  lodging-house  keepers  770%,  of  janitors  1,500%,  of  brokerage  agents 
1,010%,  of  typists  and  stenographers  150%,  of  messenger  and  office  boys 
735%,  of  shippers  and  packers  920%,  sales-men  and  -women  2,550%, 
street  railway  employees  1,180%,  of  soda-water  bottlers  740%.82  And 
so  on. 

Occupational  data  since  1890  have  been  put  on  a  sound  comparative 
basis;  so  they  are  even  more  to  the  point.  The  tabulation,  as  given  in 
Figure  2,  shows  that  the  greatest  gains  were  made  by  bookkeepers, 
sales-men  and  -women,  restaurant  keepers,  janitors,  hairdressers,  clerks, 
commercial  travelers,  employees  of  traction  and  telephone  companies, 
stenographers  and  typists,  watchmen,  shippers  and  packers,  laundry 
operatives,  and  plumbers;  the  least  by  printers,  physicians,  teachers,  ped- 
lers,  lawyers,  and  clergymen.  The  latter  three  groups  did  not  increase 
as  fast  as  population.  Barbers,  journalists,  dentists,  and  music  teachers 
hold  a  middle  position  in  the  race  for  popularity.  We  may  conclude, 
then,  that  demands  were  most  urgent  for  commercial  equipment  and 
training,  for  rapid  transit  and  a  better  intelligence  service  in  the  big 
cities,  for  protection  against  accidents  or  crime,  for  sanitation  in  one 
guise  or  another,  and  for  the  elimination  of  irksome  home  duties. 

Government  budgets  throw  additional  light  on  the  new  direction  of 
demands.  Compared  to  what  was  once  thought  a  proper  delimitation 
of  government  activites  present  views  are  radical  indeed.  From  individ- 
ualism we  have  veered  to  paternalism  of  a  sort  whose  leading  character- 
istic is  the  care  of  person  rather  than  of  profits.  Science  and  bitter 
experiences  have  taught  us  the  fundamental  importance  of  public  health, 
of  security,  right  modes  of  living,  and  careful  husbandry  of  natural  re- 
sources. Hence  expenditures  grew  at  an  astonishing  rate,  wholly  apart 
from  appropriations  for  army  or  navy.     If  for  1890  we  estimate  the  na- 

31  Census  of  1910,  vol.  4,  pp.  54-56. 

32  Ibidem. 


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PRODUCTION  17 

tional  gross  income  at  $12,500,000,000,  6.3%  of  this  colossal  sum  were 
retained  by  public  authorities;  in  1910  over  8%.33  Postal  receipts  rose 
from  less  than  a  dollar  per  capita  to  two  and  a  half  dollars,  though  postage- 
rates  remained  the  same  throughout.34  But  the  service  was  corres- 
pondingly extended  and  improved.  More  people  were  served,  more 
mail  carried  by  rail  or  water,  new  conveniences  added,  deliveries  given 
more  frequently,  regularly,  and  expeditiously.  Business  benefited  in 
one  way;  the  savers  of  hard-earned  dollars  in  another;  the  reader  by  the 
fireside  in  a  third;  and  the  cause  of  democracy  most  of  all. 

What  is  true  of  federal  government  applies  with  double  force  to  local 
administration.  Everywhere  functions  were  multiplied  and  duties  im- 
posed that  a  generation  back  few  would  have  mentioned  by  name.  Big 
cities  were  financed  for  the  welfare  of  all.  Between  1902  and  1912  their 
outlay  increased  three  times  as  fast  as  their  population,  excluding 
interest-payments  on  funded  debt.35  Sanitation  and  hygiene,  char- 
ity and  education,  highways  and  recreation  absorbed  the  greater  part  of 
appropriations.  A  new  note  is  discernible  in  the  text  of  laws  and  ordi- 
nances. Through  its  executives  and  servants  the  public  is  learning  to 
socialize  income  that  formerly  belonged  only  to  the  rich.  More  and  more 
is  spent  for  playgrounds  and  parks,  art  and  instructional  lectures,  speed- 
ways and  out-of-door  sports,  pure  foods,  beautification  of  thorofares,  rapid 
transit,  fire  protection,  the  elimination  of  unnecessary  noises  or  false 
weights  and  dirty  streets,  and  what  not.  In  short,  ideals  that  past  genera- 
tions had  never  known  except  as  a  privilege  of  the  plutocracy  are  now 
aspired  to  by  the  average  citizen. 

III.  Quality-Aspects.  This  betterment  in  volume  and  kinds  of 
public  and  private  income  has  another  noteworthy  aspect.  Namely: 
not  merely  the  variety  of  goods  increased,  or  the  amount  going  to  the 
average  man,  but  likewise  the  esthetic  and  functional  merits  of  each  arti- 
cle. In  this  we  must  seek  not  seldom  the  proof  of  a  larger  psychic  income 
for  society.  Goods  do  the  work  they  are  designed  for  more  effectively. 
They  look  better.  They  are  more  convenient,  durable  or  adaptable  to  a 
number  of  uses.  Quantity  may  be  reduced,  but  enjoyments  nevertheless 
are  greater.     Thus  garments  contain  less  cotton  or  wool  than  once  upon  a 

33  Taken  from  Willford  I.  King's  The  Wealth  and  Income  of  the  People  of  the 
United  States,  pp.  138  and  143. 

34  Statistical  Abstract  for  1913. 

35  Bureau  of  Census,  Financial  Statistics  of  Cities  of  over  Thirty  Thousand 
Population,  1912,  pp.  72-73;  See  also:  Census  Bureau,  National  and  State  Revenues 
and  Expenditures  from  1903  to  1913,  1915,  pp.  25-26. 


PRODUCTION  17 

tional  gross  income  at  $12,500,000,000,  6.3%  of  this  colossal  sum  were 
retained  by  public  authorities;  in  1910  over  8%.33  Postal  receipts  rose 
from  less  than  a  dollar  per  capita  to  two  and  a  half  dollars,  though  postage- 
rates  remained  the  same  throughout.34  But  the  service  was  corres- 
pondingly extended  and  improved.  More  people  were  served,  more 
mail  carried  by  rail  or  water,  new  conveniences  added,  deliveries  given 
more  frequently,  regularly,  and  expeditiously.  Business  benefited  in 
one  way;  the  savers  of  hard-earned  dollars  in  another;  the  reader  by  the 
fireside  in  a  third;  and  the  cause  of  democracy  most  of  all. 

What  is  true  of  federal  government  applies  with  double  force  to  local 
administration.  Everywhere  functions  were  multiplied  and  duties  im- 
posed that  a  generation  back  few  would  have  mentioned  by  name.  Big 
dties  were  financed  for  the  welfare  of  all.  Between  1902  and  1912  their 
outlay  increased  three  times  as  fast  as  their  population,  excluding 
interest-payments  on  funded  debt.35  Sanitation  and  hygiene,  char- 
ity and  education,  highways  and  recreation  absorbed  the  greater  part  of 
appropriations.  A  new  note  is  discernible  in  the  text  of  laws  and  ordi- 
nances. Through  its  executives  and  servants  the  public  is  learning  to 
socialize  income  that  formerly  belonged  only  to  the  rich.  More  and  more 
is  spent  for  playgrounds  and  parks,  art  and  instructional  lectures,  speed- 
ways and  out-of-door  sports,  pure  foods,  beautification  of  thorofares,  rapid 
transit,  fire  protection,  the  elimination  of  unnecessary  noises  or  false 
weights  and  dirty  streets,  and  what  not.  In  short,  ideals  that  past  genera- 
tions had  never  known  except  as  a  privilege  of  the  plutocracy  are  now 
aspired  to  by  the  average  citizen. 

III.  Quality-Aspects.  This  betterment  in  volume  and  kinds  of 
public  and  private  income  has  another  noteworthy  aspect.  Namely: 
not  merely  the  variety  of  goods  increased,  or  the  amount  going  to  the 
average  man,  but  likewise  the  esthetic  and  functional  merits  of  each  arti- 
cle. In  this  we  must  seek  not  seldom  the  proof  of  a  larger  psychic  income 
for  society.  Goods  do  the  work  they  are  designed  for  more  effectively. 
They  look  better.  They  are  more  convenient,  durable  or  adaptable  to  a 
number  of  uses.  Quantity  may  be  reduced,  but  enjoyments  nevertheless 
are  greater.     Thus  garments  contain  less  cotton  or  wool  than  once  upon  a 

33  Taken  from  Willford  I.  King's  The  Wealth  and  Income  of  the  People  of  the 
United  States,  pp.  138  and  143. 

34  Statistical  Abstract  for  1913. 

36  Bureau  of  Census,  Financial  Statistics  of  Cities  of  over  Thirty  Thousand 
Population,  1912,  pp.  72-73;  See  also:  Census  Bureau,  National  and  State  Revenues 
and  Expenditures  from  1903  to  1913,  1915,  pp.  25-26. 


18  RISING  COSTS  OF  LIVING 

time,  but  they  are  softer  to  the  skin  and  more  pleasing  to  the  eye.  If 
wool-supplies  have  shrunk,  silk  has  become  much  cheaper.  The  quali- 
ties rank  higher.  We  have  more  merino,  lisle,  and  Irish  linen  than  ever 
before.  The  table  is  freighted  with  a  greater  variety  of  edibles.  Fruits 
and  vegetables  are  served  the  whole  year  round,  so  that  in  regularity 
of  supply  we  obtain  the  satisfaction  that  might  otherwise  go  with  quan- 
titative increases.  When  we  purchase  groceries  they  are  not  wrapped 
up  any  old  way,  but  neatly  in  fancy  paper,  or  tucked  away  appeal- 
ingly  in  boxes  of  cardboard,  tin,  or  fine  woods.  Or  we  get  wicker- 
baskets,  waxed  tissue-paper,  stone-jars,  patent  bottles  and  cans,  etc. 
Again,  the  shopper  has  her  goods  delivered  to  any  part  of  town.  She 
is  made  comfortable  during  her  stay  in  the  mammoth  store.  All  kinds 
of  privileges,  from  the  hearing  of  a  prima  donna  to  the  exhibition  of 
Paris  gowns  on  a  living  model,  go  with  the  patronage.  There  are 
palatial  bank  buildings  and  handsomer  play-houses,  better  furnaces  to 
heat  the  home,  solid  steel  cars  for  safety  on  the  railroad,  seedless  oranges 
or  raisins,  superior  shoes  and  prettier  furniture.  And  so  one  might 
continue  ad  infinitum.  Few  commodities  of  wide  use  that  do  not  serve 
us  more  satisfactorily  today  than  a  quarter  of  a  century  ago !  In  power 
to  gratify  exacting  demands  goods  have  never  ranked  as  high  as  nowa- 
days. 

This,  too,  deserves  consideration  in  judging  of  the  changes  of  supply, 
by  mass  and  class. 


Chapter  II  —  Changes  in  Costs 

I.  The  Supply  of  Productive  Agents.  The  psychic  springs  of  eco- 
nomic as  of  most  forms  of  conduct  escape  our  observation.  No  final  causes 
are  to  be  discovered.  We  can  only  postulate  a  freedom  of  the  will  with- 
in limits,  and  then  attribute  new  endeavors  to  new  ideals,  standards,  and 
moods.  One  might  venture  to  suggest  that  a  recomposition  of  racial 
elements  within  a  political  unit  such  as  the  United  States  must  work  it- 
self out  economically,  and  that  therefore  some  purely  sociological  inter- 
pretation of  recent  changes  is  permissible.  But  such  viewpoints  cannot 
lead  very  far,  so  long  as  the  data  are  as  meagre  as  at  the  present.  The 
nearest  and  most  satisfactory  key  to  social  movements  still  remains  the 
physical  background,  the  influence  of  nature,  or  more  particularly  the 
mechanism  through  which  wealth  is  created.  In  the  material  agents  of 
production  and  their  combination  the  economic  results  are  necessarily 
given;  for  man  works  with  nothing  else.  Production  means  interactions, 
in  set  form,  between  nature  forces  and  man  aided  by  instruments  already 
wrested  from  nature,  or  which  by  his  ingenuity  he  calls  to  life. 

Now,  the  natural  resources  since  1890  were  not  augmented,  but  re- 
duced and  rendered  less  accessible.  This  is  especially  true  when  we 
measure  them  per  head  of  population  as  our  task  requires.  The  point 
is  not  that  the  area  of  all  farm  lands  increased  41%,  or  that  of  improved 
farm  lands  34%,  but  that  per  capita  the  acreage  of  both  kinds  of  lands 
fell  off  perceptibly.1  Few  new  mines  or  oil  wells  were  located  during 
the  last  decades.  With  the  exception  of  the  lumber  industry  the  pri- 
mary industries  exploited  old  fields.  Hence  mining  and  fishing  like 
agriculture  tended  to  be  centralized.  Surface-scratching  was  abandoned 
for  deep  digging  and  a  severer  application  of  muscle,  mind,  and  machine. 

Other  things  being  equal,  then,  we  should  expect  a  general  tendency 
toward  diminishing  returns.  There  would  be  every  reason  why  cost 
should  have  risen  and  goods  grown  scarcer  instead  of  more  plentiful,  as  we 
actually  find  them.  But  other  things  did  not  remain  equal.  Rather,  a 
revolution  in  aims  and  methods  took  place  such  as  the  world  had  never 
witnessed  before  except  once.  Nature  revealed  no  new  deposits.  Soil- 
fertility  in  the  main  declined,  and  the  extraction  of  raw-stuffs  involved 
greater  difficulties  from  year  to  year.  But  meanwhile  man  devised  new 
avenues  of  approach,  enhancing  his  productive  powers  and  hastening  the 
process  of  converting  dead  matter  into  live  services. 

1  Abstract  of  Census  of  1910,  p.  265. 


20 


RISING  COSTS  OF  LIVING 


But,  in  the  first  place,  the  labor-supply  itself  gained  on  population 
thanks  to  immigration  and  the  economic  emancipation  of  women.  The 
number  of  gainfully  occupied  as  defined  by  the  Census  increased  65%, 
or  making  allowances  for  differences  in  classification,  60% ;  but  the  popula- 
tion only  47%.2  Immigration  was  chiefly  responsible,  for  of  the  eleven 
millions  that  came  to  stay  between  1890  and  1910  the  great  majority 
were  of  laboring  ages.  Seven-tenths  were  men  in  the  best  years  of  life, 
ready  to  work  and  finding  it.3  But  native  women  also  entered  the  mone- 
tary regime  of  production  in  large  number.  In  1890  four  millions  were 
"gainfully  occupied";  by  1910  nearly  eight  millions.4  Deducting  a  pos- 
sible excess  of  half  a  million5  we  have  still  seven  and  a  half  millions  left,  or 

TABLE  5 
PRODUCERS  AND  NON-PRODUCERS  IN  1890  AND  1910 


Groups 


Year 

Population 

Money  Earners* 

Non-Monetary  Producers 

In  Agriculture 

At  Home  (Married  Women)t.. 
Non-Producers:  Under  10  years 

From  10-16  yearsj 

Over  69  years§ 

All  Others 


Number 


1890 
62  ,622  ,000 
22  ,451 ,000 

1 ,567  ,000 
10,150,000 
15  ,200 ,000 
7  ,900 ,000 
1 ,200 ,000 
4,154,000 


Percent- 
ages of 
Total 


1890 

100% 
35  .9% 


z  .oyc 
16  .2% 
24  .3% 

11.8% 
1-9% 

7.4% 


Number 


1910 
91 ,972  ,000 
35  ,806 ,000 

2  ,361 ,000 
16,100,000 
20 ,400 ,000 
9 ,750 ,000 
1 ,800 ,000 
5  ,755  ,000 


Percent- 
ages 


1910 
100% 
38  .9% 

2.6% 

17  .5% 

22  .3% 

10  .6% 

1.9% 

6.2% 


*  "Money-earners"  are  the  gainfully  occupied  according  to  the  Occupation  Census 
that  worked  for  money  presumably.  Both  for  1890  and  for  1910  many  were  classified 
as  gainfully  occupied  that  did  not  presumably  earn  money,  such  as  children  of  farmers 
and  their  wives.  But  owing  to  less  definite  instructions  the  number  thus  returned  in 
excess  was  much  greater  for  the  thirteenth  than  for  the  eleventh  census  (see  Intro- 
ductory Remarks  to  vol.  4  of  Census  for  1910).  Hence  the  special  category  of  Non- 
Monetary  Producers  in  Agriculture. 

t  All  married  women  over  sixteen  years  of  age  except  the  gainfully  occupied  in 
fields  other  than  agriculture. 

J  Except  the  gainfully  occupied  in  fields  other  than  agriculture. 

§  Three-fourths  of  all  over  sixty-nine  were  taken  to  be  unemployed. 
References:  Occupation  Census  and  Population  and  Age  Census  for  1890  and  1910. 
See  also  Abstract  of  Census  for  1910  on  conjugal  status  of  women. 

2  Census  of  1910,  vol.  4,  p.  30  and  p.  28. 

3  Ibidem,  vol.  1,  and  vol.  4,  pp.  64-65. 

4  Ibidem,  vol.  4,  pp.  31  and  28. 

6  Ibidem,  vol.  4,  p.  27  and  p.  28. 


PRODUCTION  21 

an  increase  of  80%.  Plainly,  though  children  under  fifteen  years  were 
increasingly  kept  out  of  the  market  by  stricter  legislation,  single  and 
married  women  filled  the  gaps.6 

Table  5  shows  the  changes  in  the  labor-supply  at  a  glance. 

In  every  community,  one  must  remember,  there  live  many  who  do 
not  produce  either  direct  services  or  material  goods.  They  represent 
consumers  solely.  Another  class  produces  things  economically  valuable 
but  not  priced  in  the  open  market.  Their  reward  is  not  directly  mone- 
tary, hence  does  not  appear  in  distributive  reckonings.  Such  are  of 
course  married  women,  children  of  working  age,  and  others  contrib- 
uting to  social  income  without  drawing  pay.  The  third  group  com- 
prises the  monetary  producers,  whether  furnishing  services  of  effort 
or  of  property.  But  needless  to  say  we  have  no  statistics  on  "rentiers." 
While  in  Table  5,  therefore,  the  percentage  of  non-producers  is  quite 
large  a  liberal  discount  is  in  order,  and  we  may  allow  it  the  more  cheer- 
fully since  our  principal  object  is  the  comparison  of  labor-supply  for 
two  different  dates,  not  the  accuracy  of  individual  figures. 

That  a  considerable  number  of  people  never  produce  is  partly  due  to 
physical  disabilities  or  to  crime.  Thus  in  1890  we  had  in  the  United 
States  106,000  insane;  95,000  feeble-minded;  41,000  deaf  and  dumb; 
50,000  totally  blind,  and  tens  of  thousands  of  other  cripples  besides. 
Prisons  held  82,000  inmates,  of  whom  70,000  had  passed  the  fifteenth 
year.7  Sixteen  per  mille  of  the  total  population  became  incapacitated 
economically,  at  one  time  of  the  year  or  another,  through  accident  and 
diseases  contracted  during  employment.8  Fully  half  a  million  conse- 
quently may  be  thought  idle  for  a  length  of  twelve  months.  Today  the 
percentage  cannot  be  much  smaller. 

But  whatever  disagreement  may  exist  on  details  one  cannot  be  in 
doubt  as  to  the  salient  facts.  Table  5  shows  that  the  productive  ages  of 
twenty  to  sixty-nine  years  are  on  the  increase  relatively,  and  that  chil- 
dren under  sixteen  years  constitute  a  decreasing  part  of  the  population. 
Here,  then,  is  a  gain  in  labor-power  that  accounts  for  much  of  our  growing 
prosperity.  When  adolescence  takes  the  place  of  senescence  in  the  dem- 
ographic pyramid  national  income  is  bound  to  reflect  it.  Inevitably  the 
laboring  hosts  gain,  as  appears  in  occupation  statistics  and  the  indus- 

8  Ibidem,  vol.  4,  pp.  30  and  69-70.  See  also  Census  Office,  Special  Report  on 
Women  at  Work  for  1900,  p.  22. 

7  Census  of  1890,  Part  I  and  Compendium,  Part  II.  See  also  for  1910  Bulletin 
121  of  Bureau  of  Census,  Special  Report  on  Benevolent  Institutions. 

8  Census  of  1890,  Compendium,  Part  XIII. 


22  RISING  COSTS  OF  LIVING 

trial  census.  Between  1890  and  1910  the  money  earners  gained  on  popu- 
lation as  a  whole.9 

But  the  new  accessions  of  labor  brought  some  noteworthy  changes 
in  particular  fields  of  employment.  Women  went  increasingly  into 
commercial  or  professional  work,10  and  aliens  turned  more  and  more 
to  the  city  as  the  scene  of  their  ventures.  Before  1883  6%  of  all  immi- 
grants were  farm  laborers,  2%  were  independent  farmers,  19.5%  skilled 
workers,  and  2.5%  professionals.11  But  from  1899  to  1909  farmers  made  up 
only  1%,  the  professionally  trained  less  than  one-half  per  cent,  skilled 
laborers  9%,  and  crude  farm-laborers  23%. 12  These  latter  particularly 
could  not  well  adapt  themselves  to  American  conditions  of  farming, 
nor  could  they  have  been  easily  located  supposing  their  initiative  had  not 
been  wanting.  Reserved  public  lands  were  thrown  open  only  in  small 
parcels;  a  subdivision  of  old  homesteads  to  assimilate  the  arrivals  from 
abroad  was  out  of  question.  Thus  the  immigrant  was  urbanized.  Tech- 
nical inventions  called  for  larger  contingents  of  crude  labor;  the  lure  of 
city  life  was  an  additional  stimulus. 

In  1890  cities  each  of  eight  thousand  inhabitants  or  more  made  up 
36%  of  the  total  population;  in  1910  over  46%.13  During  the  last  census 
decade  the  urban  population  increased  more  than  twice  as  fast  as  the  total 
population.  One  writer  attributes  about  three-eighths  of  this  urban  devel- 
opment to  immigration,14  but  one  is  tempted  to  put  it  even  higher.  At 
any  rate  the  number  of  foreign-born  since  1900  increased  from  9,249,000 
to  13,500,000.15  Of  these  72%  lived  in  cities16  which  together  har- 
bored, as  stated,  46%  of  the  grand  total.  Thirty  of  the  largest 
cities  with  only  18%  of  the  total  population  boasted  over  one- third  of  the 
number  of  foreign-born  in  the  country.17  Thus  the  drift  of  aliens  into  the 
city  and  industrial  employment  is  unmistakable.  The  national  fund 
of  energy  available  for  production  was  swelled  by  this  foreign  influx,  but 
at  the  same  time  diverted  into  industrial  channels  to  the  neglect  of  agri- 

9  See  Table  5. 

10  Census  of  1910,  vol.  4,  pp.  54-56. 

11  Jenks  and  Lauck,  The  Immigration  Problem,  p.  32. 

12  Ibidem,  and  pp.  468-70.  On  extent  of  immigration  between  1890  and  1912 
see  Statistical  Abstract  for  1913,  pp.  86-95.  On  occupations:  Census  for  1910,  vol.4, 
pp.  302-432. 

13  Statistical  Abstract  for  1911,  p.  54. 

14  Quarterly  Publications  of  the  American  Statistical  Association,  Sept.  1915. 

16  Abstract  of  Census  for  1910,  pp.  204  and  191. 
19  Ibidem,  p.  200. 

17  Statistical  Abstract  for  1911,  p.  66. 


PRODUCTION  23 

culture.  It  was  well  that  immigrants  constituted  a  smaller  percentage 
of  our  total  population  than  of  those  gainfully  occupied,  but  their  urbani- 
zation brought  peculiar  problems  of  supply  and  group-levels  of  living.17a 

Whether  capitalistic  development  was  more  cause  than  effect  one 
will  scarcely  dare  to  decide.  But  its  increased  effectiveness  as  third 
agent  of  production  is  indisputable. 

Among  primitive  folk  wants  come  first  and  efforts  afterwards;  in 
modern  society  wants  follow  in  the  wake  of  creative  enterprise  which 
fosters  them  for  motives  of  its  own.  The  public  may  approve  or  reject 
the  product,  but  the  enterpriser  will  first  put  it  on  the  market.  All 
sorts  of  improvements  favored  his  cause  during  recent  years.  To  begin 
with,  inventiveness  was  more  widespread  than  ever.  Between  1890 
and  1892  the  average  annual  issue  of  patents  amounted  to  23,000;  be- 
tween 1910  to  1912  to  35,000. 18  Hundreds  of  epoch-making  devices  came 
now  first  into  use  on  a  large  scale.  Everywhere  labor  was  saved,  produc- 
tion accelerated,  income  increased,  and  capital  reinvested.  A  billion 
dollars  worth  of  by-products  appear  in  the  latest  census  that  before  1880 
had  meant  but  waste  and  a  nuisance.19 

In  the  second  place,  credit  displaced  cash  transactions  not  only  for  ex- 
change purposes  but  equally  as  a  leverage  to  production  on  a  huge  scale. 
Property  once  idle  in  the  hands  of  hundreds  of  thousands  of  small  earners 
was  now  entrusted  to  entrepreneurs  who  opened  up  new  fields,  producing 
as  a  rule  better  things  more  cheaply,  if  not  at  first,  at  least  ere  long.  It 
was  as  if  a  magic  wand  had  been  waved  to  do  untold  miracles.  Hence, 
in  the  third  place,  combinations  of  technical  forces  and  working  materials 
greatly  enlarged  each  individual  unit  of  production.  The  average  indus- 
trial establishment  more  than  doubled  its  value-output  though  prices  rose 
not  over  20%.20  The  army  of  employees  increased  abnormally,  but  indi- 
vidual proprietors  tended  to  disappear.21  Corporations  superseded  them. 
If  blast  furnaces  since  1890  tripled  their  daily  capacity;22  if  railroad  cars 
since  1904  added  40%  to  their  carrying  capacity;23  if  steamships,  eleva- 
tors, and  printing  presses  grew  much  larger,  units  of  organization  also 
grew  in  proportion.  A  concentration  of  management  accompanied  es- 
pecially the  making  of  agricultural  implements,  automobiles,  shoes  and 

"a  Census  for  1910,  vol.  4,  p.  64. 

18  Commissioner  of  Patents,  Annual  Report  1913. 

19  See  Census  for  1910,  vol.  8  and  Industrial  Census  of  1904. 

20  Census  for  1910,  vol.  8,  p.  33. 

21  Ibidem,  p.  135,  and  elsewhere. 

22  Ibidem,  vol.  10,  p.  221. 

23  Interstate  Commerce  Commission  Reports,  Statistics  for  1914. 


24  RISING  COSTS  OF  LIVING 

boots,  canned  goods,  cement,  clocks  and  watches,  cutlery,  fire-arms,  men's 
furnishings,  tanned  leather,  rubber  goods,  corsets,  sewing  machines, 
silverware,  raw  copper,  wire,  woolens,  and  smoking  goods.24  The  policies 
that  made  Standard  Oil  invincible  succeeded  elsewhere,  and  they  were 
principally25  efficiency  of  organization,  magnitude  of  operations,  inte- 
gration of  processes,  the  emergence  of  by-products,  and  a  uniformization 
of  marketing  methods.  Here  was  the  foundation  of  surplus  profits. 
Through  them  business  was  coaxed  into  daring  ventures.  With  a  view 
to  such  extra  profits  capital  was  re-aligned,  investigation  systematized, 
and  land  and  labor  turned  to  amazing  exploits.  Scientific  management 
bade  goodbye  to  the  jack-of-all-trades,  to  local  self-sufficiency,  and  to 
the   spectre   of   diminishing   returns. 

II.  Definition  of  Costs  of  Production.  Costs  were  reduced.  Or,  to 
be  more  exact,  they  fell  more  in  one  field  than  they  rose  in  another.  But 
certainly  rates  of  return  changed  in  the  sense  here  to  be  accepted. 

At  last  analysis  we  have  only  three  kinds  of  cost  from  which  income 
springs  and  by  which  we  might  measure  its  volume.  There  is  first  personal 
effort,  labor  such  as  a  Robinson  Crusoe  would  turn  to  account  at  the  be- 
ginning of  his  career.  The  second  kind  consists  of  the  amount  of  goods 
given  in  exchange  for  something  else.  In  a  regime  of  money  and  property 
where  specialization  rules  supreme  this  cost  is  best  known.  Everybody 
gives  what  he  has  for  what  he  wants.  The  alternative  to  our  procuring 
the  new  thing  is  keeping  the  old.  The  option  is  ours,  but  both  we  cannot 
have.  For  all  costs  ultimately  are  budgetary  in  that  every  outgo  is  offset, 
whether  completely  or  not,  by  an  income.  The  ratios  will  vary  and  be- 
token either  surplus  or  deficit  according  to  viewpoint,  perfect  balances 
being  rare.     But  some  sacrifice  is  unavoidable.26 

The  third  sort  of  cost  is  a  combination  of  effort  and  goods.  In  using 
both  we  get  income,  and  this  is  perhaps  the  commonest  case  of  all.  In  the 
act  of  creating  utilities  others  are  destroyed,  labor  being  spent  also.  That 
is,  time  is  lost  in  gathering  enjoyable  goods  economically  rare. 

24  Census  for  1910,  vol.  8.  p,  182. 

25  Van  Hise,  Charles  R.,  Concentration  and  Control,  pp.  122-124. 

26  The  budgetary  view  of  costs  was  first  stressed  by  the  Austrian  School  in  terms 
of  "alternative  cost,"  of  which  "opportunity-costs"  became  a  special  phase.  See 
e.  g.,  Wieser,  Natural  Value  (W.  Smart's  translation;  Smart,  W.,  Studies  in  Econo- 
mics, p.  24:  For  a  consistently  psychological  version  see  Fisher,  I.,  Capital  and 
Income,  pp.  173-179,  and  discussion  of  "couples"  or  "interactions"  of  "a  service 
of  the  acting  instrument"  and  a  "disservice  of  the  instrument  acted  on,"  pp. 
144-45.  For  conception  of  several  rates  of  return  embodied  in  one  and  the  same  good 
see,  e.g.,  Marshall,  Alfred,  Principles  of  Economics,  pp.  376  and  436. 


PRODUCTION  25 

From  a  non-competitive  standpoint  these  three  cover  all  possible  costs, 
notwithstanding  other  aspects  in  a  competitive  regime  that  deals  with 
prices  and  monetary  income.  Rightly  understood  cost  is  for  society 
always  a  loss  of  stuff  and  effort-in-time,  the  value-element  entering  in  the 
fact  that  men  wish  to  live  and  escape  such  troubles  as  ordinarily  are  as- 
sociated with  production.     The  return  is  anything  gained  by  the  sacrifice. 

A  rate  of  return,  or  productivity  in  the  non-competitive  sense,  is  the 
volume  of  goods,  tangible  or  intangible,  produced  with  a  unit  of  labor- 
in-time,  or  a  unit  of  goods,  or  a  sum  of  the  two.  Such  productivity  is 
necessarily  specific,  i.e.,  it  refers  to  individual  acts  of  creating  stuff  or  ser- 
vices. But  one  may  generalize  and  speak  of  rates  of  return  for  an  indus- 
try as  a  whole.  At  ony  one  moment  and  for  any  one  field  of  production, 
then,  the  return  per  unit  of  costs  is  so  much.  Later  it  may  be  more  or 
less,  the  differences  of  productivity  lending  themselves  roughly  to  meas- 
urement provided  the  main  forms  of  cost  are  taken  severally  as  homo- 
geneous units. 

The  relation  of  such  cost  upon  supply  and  value  is  evident  at  once. 
The  crucial  test  is  the  time  element.  Costs  ultimately  are  in  propor- 
tion to  time.  Effort-in-time  alone  counts;  not,  for  instance,  the  mental 
process  that  in  a  flash  gives  us  an  idea  leading  to  new  combinations 
of  labor  or  capital  or  both.  An  invention  need  not  entail  costs,  while  on 
the  other  hand  its  application  reduces  cost  through  time-savings.  Con- 
sequently "the  net  human  cost  of  creative  work  is  nil,"27  in  the  broadest 
interpretation  of  the  term  "creative."  Improvements,  whether  taking 
concrete  form  or  not,  whether  applied  through  a  machine  or  a  principle  of 
management  or  a  credit  system  that  converts  inert  property  rights  into 
active  capital  goods,  liberate  energy  by  reducing  time  outlays.  By 
both  they  enrich  society.  In  other  words,  invention  acts  like  immi- 
gration, except  that  in  the  one  case  constant  labor  does  more  work, 
while  in  the  other  more  labor  is  furnished  for  like  work.  The  effect  is  the 
same:  Relatively  supplies  of  labor  and  goods  are  increased,  and  particu- 
lar forms  may  become  cheaper.  It  is  true,  however,  that  but  a  trifling 
difference  in  productivity  may  discourage  or  stimulate  effort  greatly. 
The  two  do  not  usually  change  in  proportion,  least  of  all  under  a  competi- 
tive regime.  Rather,  one  may  expect  a  slight  decrease  in  the  rate  of 
return  to  divert  energy  into  other  channels,  especially  if  the  latter 
promise  rising  returns. 

III.  Increasing  Rates  of  Return.  But  now  as  to  the  applications  of 
our  analysis. 

27  Hobson,  Work  and  Wealth,  pp.  44,  and  49. 


26  RISING  COSTS  OF  LIVING 

There  are  enough  data  on  hand  to  prove  that  productivity  grew  in 
manufacturing,  mining,  transportation  and  some  public  services  so- 
called.  As  to  the  manufacturer's  outlays,  they  comprise  principally 
labor,  raw-stuffs,  machinery,  motive-power,  space,  and  buildings.  Many 
others  might,  of  course,  be  enumerated,  but  these  weigh  heaviest  in  the 
balance.  Hence  the  test  of  return-rates  lies  in  a  comparison  of  these 
costs  with  gross  income. 

Now  between  1889  and  1890  the  value-output  of  manufactures 
increased  121%.28  Since  the  price  of  this  group  of  goods  rose  only  16% 
at  wholesale,  according  to  reports  of  the  Bureau  of  Labor  Statistics,29 
the  output  by  volume  or  weight  must  have  at  least  doubled.  This 
represents  the  credit-side  of  the  ledger.  On  the  debit-side  we  have 
(1)  Labor  represented  by  a  64%  increase  in  the  number  of  bread- 
earners,  exclusive  of  hand-trades  and  railroad  mechanics.30  We  may 
assume  minor  factors  such  as  unemployment,  weekly  work-schedules, 
etc.,  to  have  remained  constant,  though  as  a  matter  of  fact  the  changes 
effected  would  reduce  the  above  percentage  somewhat.  (2)  The  value 
of  raw-stuffs  increased  133%  which,  deducting  the  average  price-rise, 
amounts  quantitatively  to  some  90%. 31  (3)  The  use  of  machinery 
can  only  be  estimated  from  the  fact  that  it  bears  a  fairly  fixed  ratio 
to  motive-power.  A  concentration  of  management,  like  some  other 
changes  would  affect  this  ratio,  but  not  enough  to  interfere  with  our 
calculation.  Now,  the  number  of  horse-power  in  operating  plants 
increased  214%,32  so  the  stock  of  machines  could  not  have  grown  more 
than,  say,  230%  to  250%.  (4)  Motive-power  was  just  stated  to  have 
tripled.  Hence  we  may  assume  the  same  for  outlays  in  the  neces- 
sary equipment  and  fuel.  (5)  The  value  of  factory-buildings  also 
tripled.33  Therefore,  taking  ordinary  rates  of  appreciation  for  the  period, 
the  quantitative  growth  may  be  figured  at  100%  to  125%.  (6)  On 
ground-costs  no  data  whatsoever  exist,  but  considering  recent  tendencies 
toward  large-scale  production  they  cannot,  at  the  worst,  have  increased 
relatively.     Let  us  assume  them  constant  and  ignore  them  altogether. 

The  evidence  then  goes  to  show  very  clearly  that  costs  fell  and  the 
rate  of  return  rose.    A  big  saving  was  made  in  labor,  and  another 

28  Census  of  1910,  vol.  8,  pp.  32-33. 

29  Bulletin  114,  Bureau  of  Labor  Statistics,  p.  12. 

30  Census  of  1910,  vol.  8,  pp.  32-33. 

31  Ibidem,  and  Bulletin  114  of  B.  of  Labor  Stat.,  pp.  20-21. 
3~  Census  oi  1910,  vol.  8. 

33  King,  Wealth  and  Income  of  People  of  U.  S.  p.  256. 


PRODUCTION  27 

worth  while  in  the  use  of  materials.  That  is,  the  two  chief  items  of  costs 
were  reduced,  though  elsewhere  more  had  to  be  spent.  For  big  advan- 
tages a  sacrifice  was  necessitated  in  the  shape  of  comparatively  more 
machinery  and  other  accessories,  but  after  all  the  substitution  was  a  prof- 
itable one  for  both  enterpriser  and  consumer.  The  energy  and  stuff 
made  available  for  production  in  other  fields  or  for  a  doubling  of  supplies 
in  the  same  branch  of  industry  more  than  offset  the  time  and  labor  con- 
sumed in  the  making  of  added  equipment.  It  is  this  tendency  which 
raised  the  value-output  per  average  factory  hand  from  $1,954  to  $3,125 
while  prices  rose  not  over  25%,34  or  the  output  of  the  miner  from  388  tons 
per  annum  in  1902  to  504  tons  in  19 12.35  For  the  same  reason  the  mone- 
tary cost  of  iron-mining  fell,  in  spite  of  increased  wages  and  dearer 
supplies.36 

As  to  transportation  and  public  utilities  in  general.  Railroads  be- 
tween 1890  and  1912  increased  the  number  of  their  employees  by  only 
128%  and  their  track-mileage  by  85%,  but  their  ton  and  passenger-mileage 
by  respectively  243%  and  180%.37  The  average  letter-carrier  delivered 
a  bigger  parcel  of  mail.  Telephone  and  telegraph  companies  carried  more 
messages  per  invested  dollar  and  average  employee.38  Banks  increased 
their  business  twice  as  fast  as  their  capitalization.39  In  building  opera- 
tions machinery  increasingly  superseded  labor,  productivity  being  raised 
more  or  less  in  proportion.  Every  newspaper  redounds  with  tales  of 
rising  return-rates  of  which  its  own  contents  and  circulation  is  but  one 
example.     In  the  mechanical  crafts  invention  has  triumphed! 

IV.  Decreasing  Rates  of  Return.  Not  so  in  agriculture.  Here  we 
have  instead  of  a  rise  a  fall,  supplies  being  limited  in  a  double  sense.  For 
in  the  first  place  agricultural  products  are  not  continuously  procurable 
like  those  of  manufacture  or  mining.  The  seasons  will  not  be  hurried 
along.  We  must  wait.  Only  as  nature  bids  us  may  we  utilize  its  chemi- 
cal and  physical  forces  in  and  above  the  soil,  to  reap  a  harvest.    The  in- 

34  Statistical  Abstract  for  1911,  p.  738,  and  Census  of  1910,  vol.  8,  p.  35. 

35  Statistical  Abstract  for  1913,  p.  255. 

36  Census  of  1910,  vol.  11,  passim  and  p.  241,  and  Census  of  1890,  Mining  Indus- 
tries, p.  19.  The  general  rise  of  productivity  in  manufactures  is  also  brought  out  in  the 
fact  that  the  number  of  material  producers  (that  is  of  workers  producing  stuff  as  dis- 
tinct from  personal  service-goods)  increased  not  nearly  so  fast  as  the  value,  respectively 
quantity,  of  concrete  goods.     For  test  see  Census  for  1910,  vol.  4,  pp.  54-56. 

37  Statistical  Abstract  for  1913,  pp.  263-270. 

38  Ibidem,  pp.  677-679,  and  pp.  256-57;  and  Census  Bureau,  Special  Report  on 
Telephones  and  Telegraphs,  1915,  p.  162  and  elsewhere. 

39  Treasury  Report  for  1914,  p.  542-43. 


28  RISING  COSTS  OF  LIVING 

dustrialist,  on  the  other  hand,  may  toil  without  interruption,  taking  from 
stocks  as  long  as  they  last  and  caring  no't  for  diminishing  returns  while 
the  demand  raises  his  values.  This  difference  between  the  two  fields  of 
production  is  a  vital  one.  Rates  of  return  must  be  distinguished  from 
physical  obstacles  to  production  per  se.  It  is  one  thing  to  have  to 
work  harder  or  give  more  in  order  to  procure  the  desired  total  returns, 
and  another  to  be  prevented  from  satisfying  wants  at  any  cost.  Agri- 
culture, therefore,  is  always  less  favorably  situated  than  the  purely 
extractive  industries,  but,  of  course,  this  is  counterbalanced  by  the 
fact  that  the  one  product  is  reproducible  within  a  short  time  and  the 
other  non-reproducible  by  human  reckoning.  The  anorganic  elements 
are  not  redeposited  as  quickly  as  the  organic.  The  ultimate  question 
hence  is  one  of  stocks  versus  circulation  or  reconversion.  If  there's 
enough  iron  decreasing  productivity  need  not  alarm  us,  but  in  the  con- 
trary case  the  result  may  be  disastrous.  On  the  other  hand  a  loss  of 
fertility  of  soil  is  troublesome  chiefly  because  many  organic  stuffs  fill 
primary  physical  needs  and  can  be  produced  only  so  often  in  a  man's 
lifetime. 

But  in  the  second  place  supplies  fell  off,  due  to  a  fall  of  productivity. 
Though  quality  of  produce  was  improved  by  selection,  grafting,  and 
breeding;  though  new  implements  like  cream  separators,  huskers,  shear- 
ing machines,  etc.,  lowered  costs  in  the  finishing  stages,  costs  of  pro- 
duction proper  rose  per  unit  of  output.  The  average  acre  yielded  more, 
but  at  more  than  proportionate  expense  in  the  majority  of  cases. 

This  is  borne  out  sufficiently  by  Tables  6  and  7.40 

The  farmer's  chief  costs  are  land,  labor,  motiVe-power,  implements, 
and  buildings.  Again  it  must  be  conceded  that  the  list  is  incomplete. 
But  in  the  broad  comparison  here  at  issue  all  minor  expenses  may  be 
disregarded.  To  the  costs  we  must  oppose  the  returns  which  are  offi- 
cially measured  in  all  sorts  of  standards,  but  here  again  converted  into 
pounds  of  sixteen  ounces  at  rates  uniform  for  all  years.  Thus  the 
difference  may  be  stated  in  a  summary  figure  showing  the  absolute 
growth  of  production  and  of  costs  in  the  non-competitive  sense,  and 
the  ratios  of  the  two  at  the  beginning  and  end  of  our  periods. 

40  All  data  are  given  in  Census  of  1910,  vol.  5,  or  Statistical  Abstracts  for  1911, 

1912,  and  1913.     On  live-stock  figures  see  also  Annual  Report  of  Dep't  of  Agriculture, 

1913,  p.  152. — Grazing  in  national  forest  land  became  dearer  especially  of  late  years 
(see  Statistical  Abstract  for  1913,  p.  163.).  On  cost  and  returns  on  irrigated  lands  see 
Abstract  of  Census  of  1910,  pp.  423-30. — For  general  confirmation  of  shrinking  agri- 
cultural returns  see  also  Thompson,  W.  S.,  Population,  A  Study  in  Malthusianism, 
(in  Columbia  University  Studies  in  History,  Economics,  and  Public  Law,  vol.  63,  No.3) 
pp.  131-140. 


PRODUCTION 


29 


TABLE  6 

COSTS  OF  PRODUCTION  IN  AGRICULTURE  FOR  1890  AND  1910 

I.     Production  (Triennial  Averages) 


Product 

Unit 

Produced  in  Mil- 
lions 
1890            1910 

Pounds 
per 
Unit 

Produced  in 

Billions  of  pounds 

1890         1910 

Percentage 
Increase 

Cereals 

Bushel 
Pound 
Bushel 

Ton 
Bale 
Ton 

Pound 
Gallon 
Pound 
Bushel 
Pound 

Heads 
Heads 

Heads 

3017 
475 
231 

66.8 

7.2 
3.8 

1460 
5200 

295 
13 

568 

15.6 
35.9 

94.5 

4920 

1000 

333 

97  A 
12.8 

5.5 

1940 
5800 
307 
20.6 

1752 

21.4 
45.5 

111.5 

50 

1 

60 

2000 

500 

2000 

1 

8 

1 

50 

150.8 

0.5 

13.8 

133.6 
3.6 
7.6 

1.5 
41.6 
0.3 
0.6 
0.6 

246 

1 

20 

195 
6.4 
11 

1.9 
46.4 
0.3 
1 
1.8 

62  .8% 
110% 

44.2% 

45  .8% 

78% 
44.8% 

32  .7% 
11.5% 

4% 

55% 

208% 

Tobacco 

Potatoes 

Hay  and  For- 
age  

Cotton 

Cotton  seed... 
Butter  and 
Cheese 

Milk 

Wool 

Flaxseed 

Sugar 

Milk  Cows 
Other  Cattle... 
Hogs  and 
Sheep 

354.5 

530.8 

50% 
37% 
26  .4% 

18% 

References:  Statistical  Abstract  for  1913,  and  Census  of  1910,  Vol.  5. 
II.    Costs  for  1890  and  1910 


Producing  Agents 

Unit 

Millions  of  Unit 
1890                  1910 

Price- 
Rise 

Quantity- 
Increase 

Number  of  Gainfully 
Occupied 

One 

Acre 

Acre 

Dollar 

Dollar 

Dollar 

Heads 

8.96 
358 
623 
350 

41 
1900 

16.3 

12.1 
478.5 
870 
1265 
114 
3800 
20.6 

25% 
30% 
50% 

35.1% 

Improved  Lands 

All  Farm  Land 

33  .9% 
41     % 

Machinery 

260    % 

Fertilizer 

145     % 

Buildings 

50    % 

Horses  and  Mules 

26  .4% 

In  Table  6  the  output  is  stated  in  triennial  averages;  in  Table  7  for 
single,  but  fairly  normal,  years.  This  difference  and  another  trifling  one 
as  to  kinds  of  goods  listed,  should  be  noted.  However,  the  results  do 
not  thereby  become  less  acceptable.     The  first  table  shows  that  between 


30 


RISING  COSTS  OF  LIVING 


TABLE  7 
GROWTH  OF  AGRICULTURAL  PRODUCTION  AND  COSTS,  1899-1909 

I.    Returns 


Product 


Cereals 

Other  Grains  and  Seeds 
Sugar,  Hay  and  Cot- 
ton Seed 

Cotton,  Tobacco 

Minor  Crops 

Potatoes 

Fruit 

Berries 


Unit 


Bushel 
Bushel 

Ton 

Pound 

Pound 

Bushel 

Bushel 

Quart 


Production  In 
Millions  of  Unit 
1899         1909 


4439 
515 

91 
5635 
152 
316 
212, 
463 


4513 
643 

109.3 
6380 
127 

448 
214.7 

427 


Pounds 
per  Unit 


50 

45 

2000 

1 

1 

60 

50 

1.5 


Produclion  in 
Pounds  (Billions) 
1899        1909 


222 
23 

182.2 
5.6 
0.15 

19 

10.6 
0.7 


226 
29 

218.6 

6.4 

0.27 

26.9 

10.7 

0.64 


Total 


463.2 


518.5 


Increase  in  above  crops,  constituting  about  four-fifths  of  total  agricultural  out- 
put: 11.2%. 


Other  Products 


Milch  Cows 

Other  Cattle 

Hogs  and  Sheep. 


Eggs. 


Unit 


Head 
Head 
Head 


Doz. 


Farm-Stock 
1899-1901  1909-11 
(Triennial  Averages) 
in  Millions  of  Unit 


16  .4  21 .4 

34  45 .4 

91.9         111.6 

Production 
1899  1909 

1294  1591 


Increase 


30  .5% 
33  .5% 

21 .4% 


22  .9% 


II.    Costs 


Producing  Agents 


Horses  and  Mules 

Improved  Farm  Lands 

All  Farm  Lands 

Farmers  and  Laborers. 

Machinery,  etc 

Fertilizer 


Unit 

Millions 
1899 

of  Unit 
1909 

Head 

17.2 

24.6 

Acre 

414.5 

478.5 

Acre 

839 

879 

Ond 

10.2 

11.8 

Dollar 

749.8 

1265.1 

Dollar 

54 

114 

Price- 
Rise 


15% 
30% 


Quantity- 
Increase 


42  .9% 
15  .4% 
4.8% 
15.7% 
55  % 
82     % 


1889  and  1909  gross  returns  increased  50%,  labor  in  the  shape  of  farmers 
and  farm  employees  35%,  the  acreage  of  improved  lands  34%,  the  quan- 


PRODUCTION  31 

tity  of  buildings  about  50%,  motive-power  as  embodied  in  horses  and 
mules  25%,  and  the  amount  of  machines,  implements  and  fertilizer  sev- 
eral hundred  per  cent.  True,  the  gain  for  live  stock  is  not  nearly  up  to 
that  of  the  principal  crops,  but  taking  it  all  in  all  we  can  hardly  read  de- 
creasing productivity  out  of  such  statistics.  The  accession  of  new  virgin 
lands  between  1890  and  1900  was  so  great  that  it  raised  returns 
rather  than  reduced  them  if  we  consider  the  two  decades  together.  But 
we  get  quite  another  view  in  Table  7  where  the  last  decade  alone  is  con- 
sidered. Manifestly  productivity  did  decline  after  1900,  and  probably 
most  of  all  after  1910.  At  any  rate  the  aggregate  output  between  1899 
and  1909  increased  only  11%,  though  live  stock  products  somewhat  more. 
For  all  costs  the  advance  is  much  greater,  and  greatest  for  draught- 
animals  and  fertilizer.  To  put  the  reduction  of  productivity,  there- 
fore, at  10%  to  15%  would  seem  reasonable.  It  must  have  been  that 
much  at  least. 

Two  facts  then  stand  out  prominently.  The  first  is  a  reduced  rate  of 
return,  the  second  a  shrinkage  of  supply  relative  to  population  which  in- 
creased over  20%.  Costs  rose  in  agriculture  especially  during  the  last 
ten  years,  but  returns  elsewhere  increased  so  rapidly  that  capital  was 
more  and  more  industrialized.  If  food  is  understood  to  fill  primary  wants 
whose  elasticity  is  slight,  then  capital  went  where  in  this  respect  it  was 
least  needed.  Farming  was  improved  and  extended  but  not  enough  to 
maintain  the  old  level  of  consumption,  or  to  raise  it  even  as  little  as  might 
perhaps  be  expected  from  a  highly  dynamic  and  progressive  age. 

Similarly  return-rates  declined  in  the  lumber  industry.  The  saw- 
mills did  faster  work,  but  the  stands  yielded  inferior  grades  of  wood  or 
thinned  out  or  were  found  farther  away  from  centres  of  production. 
Mines  in  many  cases  produced  less  ore  or  coal  per  unit  of  effort  and  capital, 
however  real  the  gain  for  the  industry  as  a  whole.  Fishing  likewise  be- 
came costlier,  for  the  number  of  fishermen  between  1889  and  1908  rose 
4.5%  and  the  value  of  their  equipment  nearly  60%,  while  the  catch  was 
valued  only  26%  higher,  prices  rising  from  30%  to  50%.41  Indeed, 
some  species  of  fish  were  practically  exterminated.  Culture  had  to  be 
resorted  to.  The  trawlers  had  to  go  farther  out  to  fill  their  nets,  and  yet 
they  could  not  do  as  well  as  in  bygone  days.  That  is  to  say,  supplies 
nearly  everywhere  declined  as  non-competitive  costs  rose.  And  no  attempt 
at  balancing  the  loss  of  natural  fertility  by  intensified  methods  was 
made;  or  else  it  proved  to  be  but  a  half-way  measure.  The  entrepreneur 
looking  to  his  own  profits  was  satisfied  with  higher  prices.  It  was  the 
41  Bureau  of  Census,  Report  on  Fisheries  of  the  United  States  for  1908,  p.  10. 


32  RISING  COSTS  OF  LIVING 

average  consumer  that  suffered,  however  gratifying  his  gains  along  other 
lines. 

In  fine,  changes  in  the  composition  of  national  income  were  deter- 
mined, indirectly  as  well  as  directly,  by  changes  in  productivity. 


PART  II.     DISTRIBUTION 

Chapter  I. — Distribution;  Changes  in  Price 

I.  Income  and  Price.  When  incomes  change  as  rapidly  as  those  of 
the  American  people  within  the  last  generation  this  in  itself  causes  sur- 
prise and  perhaps  suspicion.  The  average  consumer  was  allowed  so 
much  of  different  classes  of  goods,  and  now  suddenly  finds  his  rations 
materially  altered.  Naturally  there  will  be  wonderment,  if  not  mis- 
givings, as  to  just  what  composition  of  his  goods-income  was  best, 
and  what  modifications  are  further  under  way.  The  consumer's  feel- 
ings are  ruffled.  He  realizes  that  something  is  lost,  despite  betterments 
in  some  respects.  He  draws  comparisons  and  comes  to  believe  that 
things  have  gone  wrong. 

But,  in  fact,  the  qualitative  and  quantitative  change  of  the  social 
dividend  itself  was  not  the  chief  feature  during  recent  years.  More 
distressing  to  many  was  its  marked  redistribution  among  particular 
groups  of  people.  A  repricing  of  goods  took  place,  and  by  this  upsetting 
of  former  value-relations  some  experienced  an  unpleasant  shock,  while 
others  for  opposite  reasons  welcomed  the  readjustment.  It  is  this  prob- 
lem of  price  and  income  that  awaits  our  consideration  in  the  next  two 
chapters. 

We  shall  treat  each  separately,  but  in  doing  so  it  must  be  remembered 
that  price  and  income  are  but  two  aspects  of  the  same  thing.  The 
two  go  inseparately  together  in  practice,  like  two  sides  of  a  sheet  of 
paper.  If  we  distinguish  them  it  is  merely  a  matter  of  expediency. 
For  instance,  looking  at  the  business  side  of  the  question,  we  are  guided 
entirely  by  self-interest.  Price  goes  against  us;  income  is  on  our  side 
of  the  exchange-transaction.  We  call  a  value  "price"  when  it  is  taken 
from  us  for  services  rendered  or  for  some  other  reason.  Income,  on 
the  contrary,  is  what  we  receive  in  the  identical  transaction.  What 
comes  in  is  desired  because  it  ministers  to  our  wants.  What  is  given 
away  is  a  loss,  a  cost  in  common  parlance.  Such  is  the  relation  whether 
tangible  stuffs  are  exchanged,  or  stuff  for  labor  or  rights  of  economic 
value.  The  distinction  between  price  and  income  in  a  regime  of  divided 
labors  should  remind  us,  however,  that  cost  differs  from  price,  and  price 
from  net  income.  In  particular  is  it  true  that  most  prices  nowa- 
days combine  several  shares  of  income  going  to  various  producers. 
Few  producers  charge  a  price  that  equals  exactly  their  consumption- 
income.     Even  the  day  laborer  has  his  tools  to  keep  intact  from  a 


34 


RISING  COSTS  OF  LIVING 


replacement  fund  that  his  wages  must  provide.  Ordinarily  we  ignore 
these  differences;  but  a  good  way  of  characterizing  the  two  aspects  of 
exchange  is  to  say  that  price  is  objective,  income  personal.  The  one 
refers  to  costs  and  privileges,  the  other  to  levels  of  living  socially  stratified. 

II.  Wholesale  Prices.  Before  1890  prices  were  low  and  wages  high; 
for  the  weighted  average  price  of  233  articles  between  1870-74  and  1890-91 
fell  from  109.4  points  to  96  points,  while  wages  rose  from  146.8  points  to 
168.4,  all  prices  representing  gold  values.1  In  other  words,  conditions 
were  ideal  for  the  workingman  but  less  satisfactory  to  capitalistic  classes. 
Indeed,  the  situation  was  so  extraordinary  even  in  America  with  its 
virgin  lands  and  currency  disturbances  that  a  rebalancing  of  profits  and 
wages  might  have  been  anticipated.  It  had  to  come  eventually,  and 
it  did. 

From  the  great  mass  of  price  data  that  are  at  hand,  thanks  to  both 
official  and  private  labors,  only  a  few  need  be  selected  to  outline  the 
leading  features  of  change  since  1890.2  To  begin  with,  the  grouping  of 
commodities  given  in  Table  8  reveals  striking  differences  of  movement 
for  wholesale  prices.3  Farm  products  comprising  one  half  foods,  lum- 
ber and  building  materials  rose  most,  clothing,  metals  and  house  fur- 
nishings least.    The  index  for  255  items  was  112.9  in  1890,  if  based  on  an 


TABLE  8 

RELATIVE  (WHOLESALE)  PRICES  OF  COMMODITIES  BY 

GROUPS,  1890-1912 

(Average  price  for  1890-1899  =  100.0.) 


Farm 
Pro- 
ducts 

Food 
etc. 

Cloths 
etc. 

Fuel& 
Lighting 

Metals 
etc. 

Lum- 
ber, 
etc. 

Drugs 
etc. 

House 
Furnish- 
ings 

Misc. 

All 

Groups 

1890 

110 

112.4 

113.5 

104.7 

119.2 

Ill 

110.2 

111.1 

110.3 

112.9 

1895 

93.3 

94.6 

92.7 

98.1 

92 

94.1 

87.9 

96.5 

94.5 

93.6 

1900 

109.5 

104.2 

106.8 

120.9 

120.5 

115.7 

115.7 

106.1 

109.8 

110.5 

1905 

124.2 

108.7 

112 

128.8 

122.5 

127.7 

109.1 

109.1 

112.8 

115.9 

1910 

164.6 

128.7 

123.7 

125.4 

128.5 

153.2 

117 

111.6 

133.1 

131.6 

1912 

171.3 

139.5 

120.7 

133.9 

126.1 

148.2 

122.9 

113.7 

133.2 

133.6 

(Condensed  from  a  Table  in  Bulletin  114,  Bureau  of  Labor  Statistics) 

1  Professor  Falkner's  indices,  as  given  in  Senate  Report  on  Wholesale  Prices  and 
Wages,  Sen.  Doc.  52,  C,  2.  ses.,  vol.  3,  part  I,  pp.  8-14. 

2  All  prices  here  cited  are  to  be  found  in  Bulletins  114  (Wholesale  Prices  1890  to 
1912)  and  136  (Retail  Prices  1890  to  August  1913)  issued  by  Bureau  of  Labor  Statis- 
tics, U.  S.  Dep't  of  Labor. 

'Bulletin  114. 


DISTRIBUTION  35 

average  of  100  for  the  decade  1890-99,  and  131.6  in  1910.     But  for  one  of 

the  nine  groups  the  rise  amounted  to  less  than  one  per  cent,  while  for 
another  it  exceeded  fifty  per  cent. 

Prices  fell  in  the  case  of  tea,  coffee,  rice,  sugar,  California  dried  fruit, 
soda  crackers,  wool,  silk,  paper,  pig  iron,  bar  iron,  barb  wire,  steel  billets, 
steel  rails,  nails,  cutlery,  handsaws,  copper  wire,  plate  glass,  a  few  varie- 
ties of  glass  ware,  laundry  starch,  wood-alcohol,  granite  goods,  calico, 
ginghams,  hosiery  (cotton),  and  quinine.  They  rose  in  the  case  of  wheat, 
oats,  bread,  oyster  crackers,  eggs,  buckwheat  flour,  barley,  corn  starch, 
rye  and  rye  flour,  cheese,  butter,  most  kinds  of  vegetables  inclu- 
sive of  potatoes,  meats,  fish,  salt,  tobacco,  cotton,  hay,  flax  seed,  practi- 
cally all  kinds  of  lumber,  tar,  rubber,  jute,  hides  and  leather,  tallow, 
crude  petroleum,  steel  tools  like  chisels,  augurs,  and  files,  locks,  some 
chemicals,  brick,  linseed  oil,  lime,  cement,  window  glass,  castile  soap, 
turpentine,  most  grades  of  furniture,  grain-alcohol,  cottonseed  oil, 
flannels,  cotton  thread  and  yarn,  most  cotton  and  woolen  fabrics, 
and  carpets.4 

This  list  of  commodities,  priced  carefully  by  the  Bureau  of  Labor 
Statistics,  is  sufficiently  representative  to  permit  the  generalization  that 
(1)  no  important  food  became  cheaper  excepting  sugar;  (2)  only  such 
manufactures  depreciated  as  do  not  figure  prominently  in  the  average 
family  budget;  (3)  foods  and  raw-stuffs  rose  more  consistently  than 
manufactures. 

But  some  further  details  should  be  noted.  Thus  the  greatest  rise 
applies  among  foods  to  corn,  milk,  cheese,  lard,  meats,  eggs,  and  barley; 
among  agricultural  rawstuffs  to  hides,  lumber,  flaxseed,  rubber,  linseed- 
oil,  jute,  hay,  and  cottonseed  oil;  and  among  other  commodities  to  crude 
petroleum,  tar,  and  tallow.  A  distinct  fall  occurred  in  coffee,  dried 
fruits,  paper,  wood-alcohol,  plate  glass,  quinine,  cotton  hosiery,  raw  silk, 
and  barb  wire;  a  moderate  rise  in  soft  coal,  coke,  copper,  spring  wheat, 
rye  flour,  bread,  corn  starch,  cotton  goods,  woolen  goods,  brick,  files, 
trowels  and  other  manufactures  of  steel.  The  essential  foods  rose  most 
in  price.5 

In  the  second  place  price  changes  set  in  at  different  times  for  dif- 
ferent classes  of  goods,  taking  first  a  downward  and  then  an  upward 
course.  The  year  1896  is  rightfully  recognized  as  the  turning  point 
in  this  movement.     However,  it  is  not  applicable  to  all  commodities. 

4  Ibidem.    Table  II.     See  also:  Investigation  of  Wages  and  Prices  in  Sen.   Doc. 
61.  C.  3.  ses.,  vol.  63,  p.  12. 
6  Ibidem. 


36  RISING  COSTS  OF  LIVING 

Thus  agricultural  produce  fell  until  about  1900,  but  rose  rapidly  there- 
after, as  e.g.,  barley,  oats,  corn,  cotton,  rye,  wheat,  butter,  rice,  pota- 
toes, and  mutton.  Again,  though  cheese,  eggs,  and  most  kinds  of 
meat  and  lumber  rose  steadily  throughout  the  two  decades  the  ad- 
vance is  most  pronounced  after  the  turn  of  the  century.  Similarly 
with  minerals,  while  the  majority  of  manufactures  depreciated  up  to 
the  Spanish-American  War  and  then  rallied  slowly.  Speaking  broad- 
ly one  may  say  that  prices  rose  first  for  farm  produce,  food  and  metals ; 
then  for  lumber,  chemicals,  clothing  and  house  furnishings;  and  last  for 
fuel  and  lighting.  That  is,  the  chief  items  of  consumption  not  only  went 
up  most  in  price,  but  also  began  to  rise  before  all  others.6 

In  the  third  place  it  is  to  be  noted  that,  in  general,  raw  materials  ap- 
preciated more  than  the  finished  goods  made  out  of  them.  This  is  no 
doubt  what  one  would  expect  in  view  of  the  trend  of  technique.  But  at 
any  rate  it  deserves  remembering,  and  incidentally  it  goes  to  show  that 
the  relation  between  sets  of  prices  is  not  as  close  as  price-level  studies 
might  prompt  one  to  assume.  From  compilations  of  the  Bureau  of 
Labor  Statistics  it  is  made  plain  that  the  index  of  fifty-five  raw-stuffs 
during  the  period  in  question  rose  from  115  to  150  points,  while  that  of 
about  two  hundred  manufactures  rose  from  112  to  130  points.7  Among 
manufactures  rising  less  or  falling  more  than  basic  materials  may  be  men- 
tioned especially  leather,  boots  and  shoes,  refined  petroleum,  copper- 
wire,  linseed  oil,  most  varieties  of  furniture,  newspaper  and  wrapping 
paper,  wood-alcohol,  bread,  corn-starch,  butter,  lard,  cotton  goods, 
barb  wire,  steel  rails,  and  bar  iron.8  On  the  contrary,  mechanics'  tools, 
cutlery,  laundry-starch  and  woolen  goods  rose  more  or  fell  less. 

The  gist  of  the  wholesale  price-course,  then,  is  this:  (1)  Prices  of 
foods,  lumber,  and  a  few  manufactures  rose  40%  to  50%.  Other  goods 
either  rose  much  less,  or  fell;  the  latter  being  true  of  most  manufactures 
and  some  foods  not  produced  in  the  United  States.  (2)  Between  1890 
and  1912  the  general  price-index  rose  about  20%.  However,  the  great 
majority  of  commodities  became  cheaper  before  1896,  and  some  even 
down  to  1900,  the  fall  being  greatest  in  the  case  of  agricultural  produce 
and  foods,  and  smalbst  for  manufactures  and  mine  products.  In  point 
of  time  meats,  dairy  products,  and  lumber  rose  first.  Since  1900  the 
price  of  many  manufactures  has  fallen  while  nearly  all  produce  has 
appreciated  greatly.     (3)  Organic  products  from  farm  and  forest  rose 

8  Ibidem. 

7  Ibidem,  pp.  14-22. 

8  Ibidem. 


DISTRIBUTION  37 

most,  especially  timber  and  meat,  the  anorganic  least.81  Indeed,  some 
minerals  became  cheaper  absolutely.  (4)  Raw  materials  on  the  whole 
rose  more  than  the  articles  fashioned  out  of  them.  (5)  Commodities 
used  in  largest  quantity  by  the  masses  of  wage-earners  appreciated 
most,  but  perhaps  the  greater  part  of  goods  used  for  further  production 
followed  at  close  range. 

III.  Retail  Prices.  In  tracing  wholesale  prices  those  at  retail  are 
more  or  less  given  also,  for  the  two  move  sympathetically.  How- 
ever, much  evidence  goes  to  show  that  the  correlation  is  not  too  rigid  and, 
for  another  thing,  that  retail  prices  tend  to  rise  more  than  those  at  whole- 
sale. It  would  seem  as  though  the  middleman  knows  how  to  recoup 
himself  liberally  for  any  costs  he  sustains  in  his  own  purchases.  For 
instance,  out  of  the  fifteen  foods  indexed  by  the  Bureau  of  Labor  Statis- 
tics, only  milk,  butter,  eggs,  and  lard  rose  strictly  proportionate  to  *vhole- 
sale  prices,  the  rest  much  more.9  The  average  price  for  all  rose  from 
102 — assuming  that  100  represents  the  average  for  1890-99 — to  148.5. 
Meat  and  eggs  rose  most;  then  lard,  butter,  milk,  corn  meal,  potatoes, 
flour,  oatmeal  and  rice  in  order  of  enumeration.  Furthermore  the  up- 
ward trend  is  continuous  since  1895,  but  most  distinct  after  1900.10 

A  weighted  index  of  food  prices  at  retail  based  on  the  amount  of  food 
consumed  by  the  average  workingman's  family  has  been  computed  with 
much  care.  This  shows  that  prices  rose  over  60%  between  1890  and 
1913,  a  year's  food  supply  costing  S294  at  the  beginning  and  S470  at  the 
end  of  the  period.11  For  western  sections  of  the  country  the  difference 
would  be  50%,  for  the  central-northern  section  not  far  from  65%.  But 
regardless  of  such  variations  retail  food-prices  may  be  said  to  have  risen 
higher  than  most  other  goods  at  retail.  Many  public  utilities  certainly, 
which  play  an  important  part  in  the  average  man's  life,  have  not  become 
dearer  to  any  extent,  if  at  all.  Thus  with  postal  rates,  charges  for  water, 
light,  transportation  by  rail12  or  trolley,  telegrams,  amusements,  educa- 

*a  See  Mitchell,  Wesley  C,  Business  Cycles,  p.  106. 

9  Bulletin  136  of  Bureau  of  Labor  Statistics.  For  great  differences  between  pro- 
ducers' and  consumers'  prices  see,  e.g.,  Bulletin  164,  pp.  7-9  (for  butter),  investiga- 
tions of  New  York  State  Food  Commission,  1912,  cited  in  vol.  48  of  Annals  of  American 
Academy  of  Pol.  and  Soc.  Science,  pp.  203-06,  and  King,  C.  L.,  Lower  Living  Costs  in 
Cities,  pp.  19-20. 

10  Bulletin  136,  Bureau  of  Labor  Statistics. 

"Bulletin  140,  pp.  11-12.     Or,  Statistical  Abstract  for  1913,  p.  505. 

12  Statistical  Abstract  for  1913,  pp.  282  and  297.  For  receipts  of  Western  Union 
per  average  message  see  ibidem,  p.  258;  for  retail  coal  prices,  rising  8%  between  1907 
and  1913,  see  Bulletin  140,  Bureau  of  Labor  Statistics,  p.  21. 


38  RISING  COSTS  OF  LIVING 

tion,  etc.  Though  some  exceptions  will  readily  occur  to  anyone,  the 
rule  is  either  a  slight  rise  only  or  none  whatsoever.  In  fine,  from  cir- 
cumstantial evidence  and  in  the  light  of  everyday  experience  one  gains 
the  impression  that  the  least  necessary  things  became  relatively  cheapest, 
while  foods,  shelter,  and  clothing  in  the  sequence  given  rose  most, 
especially  after  1900. 

IV.  Prices  and  Supply.  The  facts  so  far  brought  out  leave  no  doubt 
as  to  the  relation  between  supply  and  price.  Evidently  those  goods  ap- 
preciated most  whose  output  increased  least  relative  to  population,  and 
again  the  supply  was  largely  governed  by  questions  of  social  costs. 
Though  no  checking  up  of  details  is  possible  one  may  take  for  granted  that 
costs  fell  for  such  things  as  glass-  and  china-ware,  pulp,  wood-alcohol, 
chemicals,  cement,  tin  plate,  pig  iron,  steel  rails,  barb  wire  and  nails, 
coke,  worsted  goods,  hosiery,  shirtings  of  cotton,  calico,  corn  starch — all 
goods  for  whose  manufactures  important  inventions  and  improvements 
were  introduced.13  These  are  representative  of  the  whole  industrial 
output  which  grew  so  enormously  in  contrast  with  agricultural  supplies. 
And  these  too  are  the  goods  falling  most,  or  rising  least  in  price,  while 
the  value  of  diminishing  supplies  like  foods,  hides,  tallow,  cottonseed  oil, 
hay,  and  flaxseed  appreciated  greatly,  due  to  constancy  of  demand  or  its 
growth  ahead  of  production. 

Hence  quantity  and  value  ratios  of  supply,  as  already  intimated,  were 
reversed.  In  1909  foodstuffs  constitute  a  much  smaller  part  of  national 
income  than  in  1890,  the  maximum  gain  being  made  by  mining.  Agricul- 
tural products  had  relatively  declined  in  terms  of  physical  quantity.14  But 
their  value-ratios  meanwhile  changed  the  other  way.  In  1890  the  prod- 
ucts of  farm  and  forest  were  worth  six  times  as  much  as  minerals;  by 
1910  more  than  seven  times  as  much.  Foods  and  soil  products  form  a 
growing  part  of  the  total  value-income  but  a  smaller  part  quantitatively. 
Manufactures,  on  the  contrary,  become  less  valuable  as  they  grow  in 
volume.15 

Or,  to  return  to  our  distinction  between  circulating  and  fixed  capital- 
goods.  If  as  in  Table  9  we  count  as  circulating  all  products  of  agricul- 
ture and  of  the  fisheries,  among  minerals  salt,  petroleum,  and  coal,  also 
three-fourths  of  the  output  of  "hand- trades,"  and  finally  all  manufactures 
except  those  of  clay,  glass,  stone,  metals,  and  ships,  lumber,  a  few 

13  Compare  with  like  view  in  Bulletin  114  of  Bureau  of  Labor  Statistics. 

14  See  chapter  2. 

15  All  figures  taken  from  Census  of  1910,  volumes  8  and  10.  For  agricultural  out- 
put see  Statistical  Abstract  for  1913. 


DISTRIBUTION 


39 


TABLE  9 
PRODUCTION  OF  CIRCULATING  AND  FIXED  CAPITAL  GOODS, 

1889  AND  1909 
(In  Millions  of  Dollars  and  Percentages  of  Totals) 


Products  of: 


1889 
Circulating  Goods 


1909 


Agriculture 

Fisheries 

Mining 

Manufacture  

Hand  Trades,  etc. 


8,498 

56 

724 

13,513 

1,125 


26 

2 

44 


1% 
2% 
5% 


8,763        65.2%      23,916         72.8% 
B.     Fixed  Goods 


Forestry 

Mining 

Manufacture 

Hand  Trades,  etc. 


2 

1 

21 

1 


•4% 

8% 
8% 
2% 


4,679        34.8%       8,911        27.2% 


Of  which  was: 


Net  Addition  to  National  Wealth 

Used   for   Part    Replacement   of   Existing 

Wealth 

Total  Production 

National  Wealth 


1,300 


9.7% 


3,700        11.3% 


3,379        25.1% 

5,211         15.9% 

13 ,442         100% 

32,827       100     % 

65  ,000  (1890) 

175 ,000  (1910) 

Note:  The  value  of  hand-trades  products  for  1909  is  put  at  $1,500,000,000  and  con- 
sidered three-fourths  circulating  and  one-fourth  fixed  capital,  as  in  1899  also. — Dupli- 
cations of  value  as  between  mining  and  manufacture  products  are  put  at  $150,000,000 
for  1889  and  $216,000,000  for  1909,  and  deducted  from  gross  product.— The  replace- 
ment fund  was  found  by  deducting  circulating  capital  plus  annual  increments  in  real 
estate  values  from  aggregate  production.  The  increment  was  estimated  from  official 
reports  on  national  wealth  for  1890,  1904,  and  1912,  the  difference  between  each  pair  of 
years  being  divided  by  respectively  fourteen  and  eight,  with  allowance  for  respectively 
regressive  and  progressive  increases  of  wealth  due  to  respectively  falling  and  rising 
price-levels.  Thus,  while  the  average  annual  increment  between  1900  and  1910  was 
$3,240,000,000  the  increment  is  here  taken  at  $3,700,000,000.  All  figures  based  on 
Census  of  1910  and  1890,  or  Statistical  Abstract  for  1913. 

textile  varieties  and  some  minor  items  not  worth  specifying,  then  the 
value  of  circulating  goods  gained  on  national  income,  while  fixed  capi- 
tal-goods form  a  declining  part  of  it.16   The  explanation  manifestly  lies 

19  Dr.  Willford  I.  King  in  his  "Wealth  and  Income  of  People  of  United  States" 
arrives  at  the  same  conclusion  as  regards  agriculture,  but  estimates  manufactures  to 
have  decreased  slightly  in  value.     See  p.  140,  and  for  capital  savings  p.  132. 


40  RISING  COSTS  OF  LIVING 

in  the  fact  that  the  cheapening  of  coal  and  petroleum — though  a  formi- 
dable item  in  the  list  —  was  more  than  counterbalanced  by  the  ap- 
preciation of  farm  products  and  the  extraordinary  development  of 
machinofacture  whose  products  embody  in  the  main  circulating  capital, 
whether  directly  for  consumption  or  not. 

V.  Monopoly  Prices.  The  law  of  supply  and  demand  thus  seems 
to  be  borne  out  amply  by  the  data  of  production  and  value  just  presented. 
Over  long  stretches  of  time  as  well  as  at  any  given  moment  valuations 
evidently  stand  in  inverse  ratio  to  (relative)  physical  supply.  But  there 
is  a  restriction  that  must  now  be  noted  and  which  may  be  read  at  a  glance 
from  the  indices  of  the  Bureau  of  Labor  for  nine  groups  of  commodities.17 

Table  8  gives  these  indices  by  single  years;  but  suppose  we  take 
three-year  averages.  We  find  then  that  at  the  beginning  of  the  period 
Farm  and  Food  Products  rose  most,  then  Metals,  Cloths,  House  Fur- 
nishings, Building  Materials,  Drugs,  Fuel  and  Lighting  in  order.  But 
later  the  movements  are  such  that  between  1910  and  1912  Building- 
Materials  stand  highest,  Farm  and  Food  Products  next,  and  then  at  a 
considerable  distance  Fuel  and  Lighting  and  the  rest.18  Now,  this  re- 
arrangement agrees  with  the  facts  of  supply  and  costs  for  seven  out  of  the 
nine  classes  of  goods,  but  disagrees  with  what  we  know  about  cost  and 
supply  of  lumber  and  fuel  and  lighting.  True,- in  but  few  instances  would 
cost  and  price  show  exactly  proportionate  changes,  were  we  able  to  com- 
pare the  two.  Some  difference  between  costs  and  price  may  be  taken  for 
granted.  But  if,  as  in  the  case  of  lumber  and  lighting,  physical  supplies 
and  costs  do  not  determine  prices  even  approximately  the  explanation 
must  he  elsewhere.  There  is  plainly  a  third  factor,  a  force  besides  sup- 
ply and  cost,  that  influences  such  prices  and  many  others  whose  depen- 
dence upon  it  does  not  appear  so  clearly. 

Now  this  third  force  is  monopoly.  There  have  become  active  in 
an  unusual  degree  powers  of  control  that  formerly  ruled  only  over 
restricted  fields.  Today  control  covers  a  large  proportion  of  those 
goods  consumed  by  the  average  man.  This  control  over  prices  indepen- 
dent of  physical  supply  or  fluctuations  of  demand  affects  costs  of  living 
and  accounts  for  all  sorts  of  price-phenomena  that  otherwise  would 
remain  a  mystery.  It  becomes  therefore  necessary  to  review  briefly 
the  most  typical  cases  of  business  control  before  passing  over  to  the 
income  aspects  of  redistribution. 

17  Bulletin  114,  Bureau  of  Labor  Statistics,  p.  12. 

18  Ibidem. 


DISTRIBUTION  41 

Control  over  market-supply  and  prices  is  exercised  always  by  a  min- 
ority, by  entrepreneur  groups  with  differential  advantages  along  various 
lines,  who  defy  the  broader  law  of  competition  and  seek  to  equilibrate 
supply  and  demand  for  their  own  purposes. 

Huge  aggregations  of  capital  in  the  hands  of  corporations  have  of 
late  gained  power  distinct  from  that  of  invention  or  mere  superior  man- 
agement. Theirs  is  the  power  of  property  by  such  combinations  of  capi- 
tal as  had  their  inception  in  the  early  nineties.  The  solution  of  the  prob- 
lem was  found  in  consolidation  of  interests.  Industrial  concerns  of  un- 
heard of  financial  strength  were  floated  in  order  to  perfect  a  technical 
mastery  over  the  vast  resources  of  the  country.  Between  1890  and  1894 
sixteen  corporations  issued  securities  valued  at  $583,000,000;  between 
1895  and  1899  fifty  corporations  nearly  three  times  that  much.  In  1899 
alone  thirty-eight  concerns  issued  far  over  one  billion  dollars'  worth. 
In  the  succeeding  five  years  the  output  by  sixty-three  companies  rose  to 
$3,500,000,000,  while  from  1905  to  1909  not  quite  one  billion  dollars  of 
stocks  and  bonds  were  marketed.19  That  is,  financial  expansion  reached 
its  height  during  and  immediately  after  the  War,  and  came  to  an  abrupt 
stop  in  1907.     Since  then  additions  have  been  relatively  smaller. 

But  as  everybody  is  aware  this  did  not  mean  the  end  of  combination. 
Though  "trusts"  have  been  abolished  other  forms  of  organization  have 
taken  their  places.  Control  survives  lustily,  not  because  laws  are  violated 
but  mainly  because  the  merits  of  business  control  and  monopoly  rise  above 
their  defects.  A  few  years  ago  a  "money-trust"  was  unearthed  whose 
ramifications  involved  many  billions  of  dollars  in  banking  and  industry.20 
Today  a  dozen  railroad  systems  handle  three-fourths  of  the  total  inter- 
state traffic.21  In  addition  land-carriers  have  acquired  vast  shipping  and 
terminal  port  facilities,  canals  and  elevators,  and  coal  mines.22  A  just 
published  report  of  the  Department  of  Agriculture23  confesses  that  "the 
movement  toward  concentration"  of  ownership  in  water-power  "is  found 
in  all  sections  of  the  United  States,  especially  so  since  1902."     Eighteen 

19  House  Reports,  63.  C,  I.  ses.,  vol.  2,  Parts  4,  5,  6,  7. 

20  Money  Trust  Investigation  before  Subcommittee  of  Commission  on  Banking 
and  Currency,  Interlocking  Directorates,  1913. 

21  Interstate  Commerce  Commission,  Statistical  Division,  Reports  for  1913. 

22  See  notably  for  shipping,  etc. :  Report  of  Commissioner  of  Corporations, 
1909-10,  four  Parts;  for  coal-holdings  (made  illegal  by  recent  legislation)  Jones,  E., 
Anthracite  Coal  Combination,  in  Harvard  Univ.  Economic  Studies,  vol.  II,  and  Near- 
ing,  Scott,  Anthracite. 

23  See  also  Report  of  Commissioner  of  Corporations  on  Water-Power  Develop- 
ment in  the  United  States,  1912. 


42  RISING  COSTS  OF  LIVING 

corporations  control  more  than  one-half  the  water  power  employed  by- 
public  utilities,  six  controlling  over  one-fourth.  Again,  of  the  total  quan- 
tity of  standing  timber  the  government  holds  but  one-fifth,  and  private 
interests  the  remainder.24  A  group  of  three  concerns  owns  13.6%  of  the 
total;  eight  hold  19.4%;  a  score  or  so  over  one  quarter;  three  hundred 
eighty-five  corporations  57%.  What  is  more,  by  the  fact  of  their  tim- 
ber holdings  these  companies  get  possession  at  the  same  time  of  seventy- 
eight  million  acres  of  land,25  most  of  which  could  be  put  under  cultivation 
after  some  preliminary  care  and  improvement. 

An  extension  of  markets  followed  naturally  upon  such  concentration 
of  control  and  production.  The  American  Sugar  Refining  Company, 
e.g.,  controlled  still  over  60%  of  the  total  sales  in  19 10.26  Six  packing 
concerns  supplied  one-half  of  the  consumers.27  Anthracite  fell  into  the 
hands  of  a  few  railroads  in  the  East.28  United  States  Steel  produced  in 
1910  43%  of  all  pig  iron  and  spiegel  iron.  54%  of  the  steel  ingots,  59%  of 
the  rails  consumed  domestically,  and  one-half  of  the  structural  materials 
with  the  exception  of  pipes  and  tubes.29  The  American  Tobacco  Com- 
pany in  1909  made  93%  of  the  cigarettes  consumed  in  the  United  States, 
62%  of  the  plug  tobacco,  three-fifths  of  the  smoking  tobacco,  and  over 
80%  of  the  snuff.  All  this  territory,  if  one  deducts  part  of  the 
cigarette  trade,  was  conquered  between  1891  and  1906.30 

Further  examples  might  easily  be  cited.  However,  we  are  here  in- 
terested not  so  much  in  the  development  of  large-scale  business  as  in  its 
effects  upon  prices.  It  will  be  asked:  Did  control  based  on  such  organi- 
zation and  resources  govern  prices  irrespective  of  costs  and  "natural 
value'"  or  not?  Not  all  have  answered  the  question  by  the  same  sign. 
Some  of  the  best  authorities  see  no  connection  between  so-called  trusts 
and  high  prices.     Others  find  it  to  be  rather  intimate.31     A  third  group 

24  Commissioner  of  Corporations,  Report  on  Lumber  Industry  in  four  parts. 

25  Ibidem,  Part  III,  p.  161. 

28  Van  Hise,  Charles  R.,  Concentration  and  Control,  p.  148. 

27  Ibidem,  p.  151. 

28  Nearing,  Scott,  Anthracite,  and  as  under  note  22. 

29  Van  Hise,  Concentration  and  Control,  p.  119,  and  pp.  140-41. 

30  Commissioner  of  Corporations,  The  Tobacco  Industry,  Part  I,  pp.  29-30,  and 
Part  II,  p.  4. 

For  concentration  in  banking  see  Treasury  Report  for  1914,  p.  543. 

31  The  Industrial  Commission  of  1898  found  price-control,  coupled  with  a  rais- 
ing of  wages.     In  the  report  of  the   Commission   for   Investigation   of   Wages   and 


DISTRIBUTION  43 

steers  a  middle  course  according  to  the  particular  applications  that  seem 
to  loom  up.  It  has  gradually  come  to  be  recognized  that  prices  and 
profits  are  two  different  things,  or  that  costs  of  living  at  any  rate  involve 
much  more  than  the  workings  of  a  single  force  like  control. 

This  must  be  kept  in  mind  when  prices  fixed  by  "trusts"  are  inves- 
tigated. That  as  such,  however,  prices  have  been  dictated  by  large  con- 
cerns in  defiance  of  competitive  rules  cannot  be  doubted.  Lumber  mag- 
nates, for  instance,  used  secret  agreements,  monopoly  of  holdings,  and 
like  methods  so  successfully  that  market  prices  moved  in  close  accord 
with  their  own  listed  prices.  In  the  case  of  yellow  pine  the  correlation 
averaged  for  many  years  90%,  for  Douglas  fir  85%,  and  for  northern  pine 
and  hemlock  not  much  less.32  Petroleum  furnishes  another  example  of  the 
power  of  big  business.  On  one  and  the  same  day  its  price  varied,  with 
due  allowances  for  differences  in  freight  charges,  from  six  and  a  half  cents 
per  gallon  to  twenty-three  cents  in  different  parts  of  the  United  States.33 
Again,  Professor  Meade  admits  that  trust  prices  rose  more  between  1897 
and  1910  than  an  equal  number  of  goods  not  made  by  trusts.34  A  casual 
perusal  of  the  reports  of  the  Commissioner  of  Corporations  convinces 
one  of  nothing  so  much  as  of  the  wide  range  of  controlled  prices  and  their 
influence  upon  the  consumer's  pocketbook.  Steel,  sugar,  tobacco,  coal, 
farm  implements,  cash  registers,  copper,  petroleum  products,  and  trans- 
portation rates  are  familiar  examples.  What  once  was  the  exception 
promises  to  become  the  rule  almost :  Competition  is  being  supplanted  by 
control.  It  is  hence  not  necessary  to  fall  back  on  tariffs  in  order  to  ex- 
plain high  prices  or  profits.  That  tariffs  ordinarily  add  to  the  consumer's 
expense  and  that  in  isolated  cases  a  remission  of  duties  benefits  the  pro- 
Prices  (Sen.  Doc.  61.  C,  3.  ses.,  vol.  63,  pp.  117-123)  prices  were  held  not  to  have  been 
affected  to  any  extent.- — Prof.  Jeremiah  Jenks  in  an  article  of  recent  date  (Review  of 
Reviews,  vol.  41,  p.  348)  finds  no  causal  relation  from  trusts  to  high  prices.  But  see 
also  his  "The  Trust  Problem,"  1901,  pp.  138,  144,  170.  Prof.  Scott  Nearing  in  his 
"Reducing  the  Cost  of  Living"  holds  Trusts  responsible  for  high  prices  only  in  the 
case  of  coal  and  some  textiles  (pp.  161-62).  But  costs  of  living  are  distinguished  from 
high  prices  (p.  163).  For  further  views  see  Annals  of  Am.  Academy  of  Political  and 
Social  Sience,  vol.  20,  No.  3,  p.  135,  citing  results  of  Chicago  Conference  on  Trusts. 

32  Commissioner  of  Corporations,  Lumber  Industry,  Part  4,  pp.  126-250,  379, 
563,  and  633. 

33  Ibidem,  Report  on  Petroleum  Industry,  Part  II,  p.  37. 

34  Journal  of  Political  Economy,  April,  1912. — For  price-manipulation  by  Inter- 
national Harvester  Company  see  Report  of  Commissioner  of  Corporations,  1913,  p. 
248  and  249.  For  instructive  study  on  Sugar  Price?  see  Bulletin  121  of  Bureau  of 
Labor  Statistics,  1913,  pp.  10  and  30. 


44  RISING  COSTS  OF  LIVING 

ducer  alone  has  been  acknowledged  by  competent  investigators.35  The 
main  point  is  not,  however,  the  direct  relation  of  protective  policies  to 
profits — for  profits  may  rise  while  prices  fall,  just  as  society  may  benefit 
by  rising  prices — but  the  possibility  of  long-time  contol  over  prices  and 
the  general  loosening  of  ties  between  price  and  utility. 

The  new  tendency,  to  be  sure,  has  led  to  counterblasts  of  con- 
trol in  quarters  where  one  might  least  expect  it.  Thus  we  have  coopera- 
tion among  farmers  in  defence  against  industrial  capitalism.  The  first 
farmers'  grain  elevator  dates  from  1889,  but  in  1911  there  existed  over 
eighteen  hundred.36  Supreme  Court  decisions  have  encouraged  dealings 
directly  between  producer  and  consumer  without  pronouncing  on  the 
limits  of  price-fixation.37  Where  the  advantage  is  to  reside,  then,  can- 
not be  predicted.  Granges  have  multiplied  and  enlarged  their  activities. 
We  have,  furthermore,  fruit-growers'  and  retail-grocers'  associations, 
and  cold-storage  companies  regulating  more  than  the  temperature 
of  their  chilling-rooms.  In  1909  3%  of  all  commercially  slaughtered 
beef,  4%  of  the  mutton,  11%  of  the  pork,  over  13%  of  the  eggs,  and 
one  quarter  or  thereabouts  of  the  butter  passed  through  such  houses  to 
be  distributed  later  to  the  retailers!38  Usually  the  wholesale  prices 
rose  by  no  more  than  costs  of  preservation,  but  at  retail  the  difference 
becomes  greater.  In  all  cases  prices  are  determined  independently  of 
momentary  supplies.  They  are  stabilized  by  the  withholding  of  a 
margin  of  profit  that  will  compensate  for  possible  losses.  In  general 
the  public  benefits  by  betterment,  but  meanwhile  the  fact  of  price- 
regulation  should  not  be  overlooked.  To  offset  imagined  or  real  ag- 
gressions on  the  part  of  big  business  consumers  have  finally  banded 
themselves  together,  too.  Consumers'  leagues  are  on  the  increase. 
There  are  building  and  loan  associations,  mutual  insurance  companies 
and  banks  and  still  other  undertakings — all  designed  to  bring  costs  and 
prices  together  and  curtail  the  gains  of  control. 

35  Taussig,  F.  W.,  Some  Aspects  of  the  Tariff  Question,  pp.  9-13,  and  pp.  102-112, 
and  pp.  304  and  317.  For  special  study  of  sugar  question  see  Blakey,  Roy  G.,  "The 
United  States  Beet-Sugar  Industry  and  the  Tariff,"  pp.  210-11. 

38  Powell,  G.  Harold,  Cooperation  in  Agriculture,  pp.  122-27,  and  pp.  185-95. 

37  Cited  in  "  Farm  Machinery  Trade  Associations  "  of  Department  of  Commerce, 
Bureau  of  Corporations,  1915,  p.  160. 

38  Annual  Report  of  Sec.  of  Agriculture,  1911,  pp.  31-34. 


Chapter  II — Changes  in  Income 

I.  Distributive  Units.  The  terminal  point  in  an  analysis  of  costs  of 
living  is  necessarily  income,  for  this  denotes  the  volume  and  variety  of 
goods  enjoyed  by  all  parties,  whether  producing  or  not;  and  by  the  dif- 
ferences from  time  to  time  in  this  income  we  express  our  ideas  of  costs. 
No  other  test  is  so  rational  or  satisfactory.  Society  produces  when  it 
labors.  It  produces  more  than  is  necessary  to  subsistence.  By  and  by 
it  augments  its  surplus  though  extending  its  wants.  Or  perhaps  we  should 
say  because  it  extends  its  wants.  At  any  rate  a  dividend  must  be 
apportioned  to  the  various  members  of  the  producing  group,  and  through 
them  income  reaches  all  other  members  of  the  community. 

But  the  apportionment  follows  no  one  law  that  we  have  yet  been  able 
to  verify.  Always  the  distribution  is  unequal.  Some  get  much,  others 
little.  Progress  calls  into  being  various  income-classes  whose  shares  may 
have  a  technical  basis  or  not.  Property-rights  help  to  obliterate  original 
contributions  of  material  wealth.  Times  change  and  with  them  incomes 
for  groups  of  people,  but  due  to  just  what  particular  circumstance  cannot 
always  be  ascertained.1  One  can  hardly  go  beyond  a  general  classifica- 
tion of  causes  or  beyond  a  tabulation  of  the  main  results  of  such  redis- 
tributions. 

The  underlying  causes  of  the  change  have  in  large  part  been  treated 
in  earlier  pages.  For  the  measurement  of  the  income-changes  them- 
selves a  distributive  unit,  or  a  set  of  such  units,  must  be  decided  upon 
first  of  all.  We  may,  of  course,  consider  several  principles  of  dividing 
the  national  dividend.2  An  ideal  way  would  be  to  measure  the  income 
per  year  for  each  family  in  terms  of  goods,  noting  what  was  consumed 
and  what  saved.  The  sources  need  not  matter.  The  next  step  would 
then  be  simply  to  group  the  incomes  on  some  principle  calculated  to 
serve  practical  ends,  or  to  lead  to  a  formulation  that  might  have  more 
than  temporary  and  local  applications.    A  second  way  would  be  to 

1  The  "dynamic  forces"  that  make  for  economic  change  in  society  have  been 
variously  classified.  See,  e.g.,  John  Bates  Clark,  Distribution  of  Wealth,  chap.  25; 
Davenport,  H.  J.,  Value  and  Distribution,  pp.  514-15;  Fisher,  I.,  The  Purchasing  Power 
of  Money;  and  Why  the  Dollar  is  Shrinking,  pp.  89,  93,  101,  and  104,  giving  influences 
affecting  the  equation  of  exchange.  For  causes  of  budgetary  pressure  see  also:  Patten, 
S.  N.,  Reconstruction  of  Economic  Theory,  pp.  53,  56,  and  pp.  60-68. 

2  For  a  discussion  of  difficulties  see  Streightoff,  Frank  Hatch,  The  Distribution 
of  Incomes  in  the  United  States,  chap.  2-3.  Prof.  Scott  Nearing  in  his  Income  agrees 
with  Prof.  E.  Carman's  book  on  Wealth  where  all  incomes  are  divided  into  those  from 
services  and  those  from  property. 


46  RISING  COSTS  OF  LIVING 

consider  family  incomes  earned  in  the  course  of  production  only,  de- 
ducting also  taxes  as  representing  a  fund  of  uncertain  benefit  to  the 
average  family. 

The  mere  mention  of  these  modes  of  procedure  forces  at  once  two  con- 
clusions. The  first  is  the  impossibility  of  a  survey  by  individual  families, 
whether  within  the  productive  process  or  without  it;  and  the  second  the 
impracticability  of  a  measurement  of  incomes  by  volume  and  kind  of 
goods  consumed.     Plainly  both  plans  are  impossible  of  execution. 

We  are  therefore  driven  to  a  monetary  measurement,  in  the  first  place, 
and  to  a  larger  grouping  of  society  in  the  second  place.  Furthermore, 
not  what  is  acquired  in  the  course  of  secondary  distribution,  or  relin- 
quished on  behest  of  law  can  interest  us,  but  what  producers  receive 
as  such.  If  in  taking  such  larger  units  personal  income  remains  un- 
known this  is  unavoidable.  Likewise  we  can  only  bear  in  mind,  as 
important  from  the  practical  standpoint,  that  different  income-classes 
probably  have  differently  sized  families,  and  that  in  general  secondary 
distribution  plays  a  larger  part  among  producer-groups  the  greater 
their  shares  in  production  proper.  Barring  like  minor  shortcomings 
the  factorial  and  occupational  classification  of  incomes  is  then  the  best 
with  the  statistical  information — deplorably  meagre  even  today3 — 
at  hand. 

II.  Wages.  Nominally  wages  have  risen  since  1890.  Assuming  an 
average  of  100  points  for  the  decade  1890  to  1899  we  get  for  1890  an  hour- 
rate  index  for  adults  employed  in  forty-one  industries,  comprising  three 
hundred  thirty-three  occupations  and  weighted  by  the  number  of  earners 
in  each,  of  100.3  points,  and  of  128.8  points  for  1907. 4  Since  then  wages 
have  risen  further.  Dr.  Rubinow,  by  combining  an  index  for  sixteen 
industries  for  the  years  1907  to  1912  with  the  index  just  cited  and 
substituting  a  plain  arithmetical  for  a  weighted  average,  found  an  index 
of  100.  2  points  for  1890  and  of  141  for  1912.5  These  are  rates  of  wages 
per  hour.  Census  reports  put  the  increase  in  the  number  of  industrial 
wage-earners  between  1900  and  1910  at  53.5%,  and  that  of  the  amount  of 
wages  paid  out  at  79%.6    The  difference  would  roughly  indicate  the  rise 

3  See  Streightoff ,  Distribution  of  Incomes,  chap.  4.  The  main  sources  of  our  data 
on  incomes  are  there  given.     But  see  also  Nearing,  Scott,  Income. 

4  Cited  by  Dr.  Rubinow  in  an  article  on  the  Recent  Trend  of  Real  Wages,  in 
American  Economic  Review,  Dec.  1914,  pp.  809-810. 

6  Ibidem,  p.  811.  Dr.  Rubinow  bases  his  calculation  on  Bulletins  128  to  131, 
134  to  137,  and  59,  65,  71,  and  77  of  the  Bureau  of  Labor  Statistics.  From  them  his 
general  index  is  constructed. 

•  Census  of  1910,  vol.  8,  pp.  32-33. 


DISTRIBUTION  47 

of  earnings  per  annum,  viz.  25%.  Professor  King  estimates  it  at  27%, 
the  income  for  the  year  1890  being  $398,  and  for  1910  $507. 7  Weighting 
the  hour-rates  for  male  workers  in  four  main  fields  of  production  by  the 
number  of  workers  in  each  he  computes  indices  of  100.2  points  and  137.6 
respectively,  100  points  representing  the  average  for  1890  to  1899.8 
In  1912  it  would  thus  have  been  145.2  points.  Various  authorities  agree 
so  closely  on  the  general  advance  of  wages  in  industry  that  we  may  safely 
fix  it  at  35%  to  40%,  or  if  reckoned  by  the  year,  at  30%  to  35%.  How- 
ever, this  applies  only  to  wage-earners,  not  to  many  salaried  classes  or 
to  professionals  earning  "fees." 

It  should  next  be  noted  that  wages  did  not  move  at  the  same  rate  in 
all  branches  of  industry  or  for  all  grades  of  labor.  Quite  striking  variations 
are  common.  Thus,  as  shown  in  Table  10,  the  index  for  railroading  rose 
from  96.3  points  in  1890  to  137.5  in  1910,  for  manufacturing  from  102.1  to 
135.1,  for  mining  from  97  to  142.4,  and  for  farming  from  99.4  to  140.2 
points.9  That  is,  we  have  a  maximum  rise  of  over  forty  points,  and  a 
minimum  of  thirty- three.  By  1913  the  divergence  would  show  still  more 
clearly.  Again,  during  this  time  wages  in  cotton  industries  rose  64 
points,  in  the  woolen  49,  in  the  silken  industries  17,  in  lumbering  31,  in 
boot  and  shoe  factories  33,  in  hosiery  and  knitting  mills  nearly  44  points, 
and  in  furniture  factories  29. 10  Weight  these  wages  by  the  number  of 
workers  and  the  increases  will  be  as  given  in  Table  11.  The  hand-trades 
benefited  most,  and  silk-workers  least.  On  the  other  hand,  it  is  of  course 
likely  that  some  workers  were  better  paid  at  the  outset  than  others  doing 
similar  work,  so  that  exceptional  rises  should  be  in  part  discounted. 
Farm  labor  earned  abnormally  low  wages  at  first,  hence  a  marked  rise 
afterwards.  Between  1890  and  1907  such  laborers,  employed  out  of 
doors  and  paid  by  the  season  or  year  in  cash  or  part  cash  and  part  board 
and  lodging,  bettered  their  income  by  40%. u  Up  to  1912  the  increase 
according  to  Professor  King  amounted  to  about  50%.  Miners  did  equal- 
ly well,  but  the  average  for  eleven  industries  was  only  38%.12 

8  Ibid.,  p.  195. 
» Ibid. 

10  See  Bulletins  128  of  Bureau  of  Labor  Statistics,  pp.  8-10  (cotton  industry),  pp. 
113-14  (woolen  industry),  p.  174  (silk  industry);  Bulletin  129,  pp.  8-9  (lumber  in- 
dustry), Bulletin  134,  pp.  8-15  (shoe  industry),pp.  73-76  (hosiery  industry) ;  Also : 
King,  Wealth  and  Income,  p.  268. 

11  Bureau  of  Statistics,  Bulletin  99,  1912,  of  Dep't  of  Agriculture,  pp.  52-53. 

12  King,  Wealth  and  Income,  p.  195. 


48 


RISING  COSTS  OF  LIVING 


Most  wages  fell  before  1895  and  rose  slowly  during  the  next  decade. 
Thus,  in  the  Nineteenth  Annual  Report  of  the  Commissioner  of  Labor  the 
index  compiled  from  a  survey  of  sixty-seven  industries  with  five  hundred 
and  nineteen  distinctive  occupations  stands  at  100.3  in  1890,  at  98.3  in 
1895,  at  105.5  in  1900,  and  at  114.8  in  1903,  the  average  for  the  entire 

TABLE  10 

HOUR  WAGE  INDICES  FOR  MALE  EARNERS  IN  PRINCIPAL  FIELDS  OF 

PRODUCTION 

(Average  for  Decade  1890-1899=  100) 


All  Industries 

Railroading 
2 

Manufacturing 

Mining 

\griculture 

Weight 

17 

8 

1 

6 

1890 
1900 
1904 
1912 

100.2 
107 
122.6 
145.2 

96.3 
105.8 

118.2 
145.6 

102.1 
105.6 
116.6 
140.3 

97 

99.9 
135.3 
149.8 

99.4 
110.5 
130.1 
150.9 

From  Dr.  Willford  I.  King's  "Wealth  and  Income  of  the  People  of  the  United 
States";  p.  195. 

TABLE  11 

INDICES  OF  HOUR  WAGES,  WEIGHTED,  FOR  MALE  EARNERS  IN  SPECI- 
FIED INDUSTRIES 
(Average  of  1980-1899=  100  .0) 


All  Indus- 
tries 

Cotton 

Woolen 

Silk 

Knit-Goods 

Boots  & 
Shoes 

Weight 

52 

102.1 
105.6 
135.1 
140.3 

4 

1 

1 

1 

3 

1890 
1900 
1910 
1912 

108.9 
106 
143.8 
162.3 

99.8 
111.2 
133 
149.1 

98.5 
102.3 
112.2 
117.8 

107.8 

92.8 

137.2 

154.8 

98.7 
104.4 
130.8 
134.1 

Hand- 
Trades 

Lumber 

Mill-Work 

Furniture 

Railroad  Car 
Building 

Iron  & 
Steel 

Weight 

14 

11 

2 

2 

7 

6 

1890 
1900 
1910 
1912 

99.1 
107.1 
146.3 
151.8 

101.9 
105.4 
130 

131.5 

99.2 
105.9 
127.8 
132.3 

100.5 
102.4 
130.5 
135.1 

101.6 
100.6 
126.2 
129 

109.0 

111 

133 

135  .2 

(Condensed  from  Dr.  Willford  I.  King's  Table  in  "Wealth  and  Income  of  the  People 
Of  the  United  States,"  pp.  266-68.) 

7  King,  Wealth  and  Income — ,  p.  168. 


DISTRIBUTION  49 

decade  of  1890-99  being  reckoned  at  100  points.13  The  so-called  Dewey 
Report  which  is  based  on  thirty  principal  industries  estimates  weekly 
earnings  of  workers  at  $11.57  for  1890,  and  at  $11.52  for  1900.14  Farm- 
wages  meanwhile  rose  eleven  per  cent,  as  shown  by  a  comprehensive  and 
careful  study  undertaken  for  the  Department  of  Agriculture  some  years 
ago.15  In  other  fields,  it  will  be  seen  from  Table  10,  the  advance  of  wages 
was  also  slight,  factory-hands  gaining  least. 

For  the  period  1907  to  1913  we  must  record  mainly  two  facts,  namely 
first  a  rapid  rise  of  wages,  and  secondly  a  reduction  in  the  number  of  work- 
ing hours  per  week.  The  very  marked  advance  in  pay  may  be  illustrated 
from  data  on  union  wages,  though  the  tendency  was  not  confined  to  them 
alone.  We  find  that  bakers  on  the  average  increased  their  wages  19%, 
the  building  trades  11%,  metal-workers  13%,  printers  and  binders  12%, 
newspaper  printers  12%,  stone-cutters  5%.  That  is,  the  average  for  all 
would  be  about  12%.16  However,  with  this  betterment  per  hour  of  labor 
came  a  reduction  of  the  weekly  or  monthly  work-schedule,  especially  after 
1907.  All  in  all  it  amounted  to  perhaps  4%  or  5%,17  but  in  some  cases  it 
exceeded  that.  Thus  in  the  railroad-car  building  and  repairing  industry 
cabinet-makers  lost  7%  of  their  income-time,  machinists  10%,  painters 
over  7%,  and  tinners  and  upholsterers  each  8%.18  Since  1907  all  but  five 
out  of  forty  trades  had  their  hour  reduced  by  more  than  2%,  and  sev- 
eral by  more  than  10%  and  up  to  nearly  20%.19 

Female  wages  are  frequently  lower  for  like  kinds  of  work  than 
male,  but  one  cannot  judge  from  that  as  to  the  relative  improvement  of 
each  class  of  workers  since  1890.20  While  women  may  still  be  underpaid 
in  one  sense  there  is  no  evidence  to  prove  that  they  fared  less  well  than 

13  P.  23. 

14  Cited  by  Streightoff ,  Distribution  of  Incomes,  p.  99-100. 

15  Department  of  Agriculture,  Bureau  of  Statistics,  Bulletin  22  of  Miscellaneous 
Series,  p.  10.  The  rise  of  farm  wages  between  1900  and  1910  is  there  given  as  equal 
to  60%.  The  Census  for  1910  (vol.  5,  pp.  560-61)  puts  it  still  higher. 

16  Bureau  of  Labor  Statistics,  Bulletin  143,  pp.  7-8. 

17  Ibid.,  pp.  10-13.  See  also:  Dr.  Rubinow's  article  in  American  Economics  Re- 
view, Dec.  1914,  p.  811. 

18  Bureau  of  Labor  Statistics,  Bulletin  137,  pp.  8-11. 
"Ibid.,  Bulletin  131,  pp.  6-9. 

20  For  years  1895-96  see  Eleventh  Annual  Report  of  Commissioner  of  Labor,  p.  28. 
For  period  1890  to  1908  see  "Women  and  Child  Wage-Earners"  in  Sen.  Doc,  61.  C, 
2.  ses.,  vol.  18.  For  comparison  of  male  and  female  wages  see  King,  Wealth  and  In- 
come, pp.  194,  202,  and  p.  265,  where  changes  are  found  to  have  been  about  the  same 
for  both.  See  also  Nearing,  Scott,  Income,  p.  106,  and  Bulletins  128  and  134  of  Bureau 
of  Labor  Statistics. 


50  RISING  COSTS  OF  LIVING 

their  male  competitors.  On  the  contrary,  they  have  raised  themselves 
to  a  higher  scale  by  leaving  the  ranks  of  crude  labor,  and  this  is  of  greater 
importance  than  a  nominally  smaller  rise  of  wages  in  select  industries. 
In  1890,  for  instance,  30%  of  all  gainfully  occupied  women  were  servants 
and  waiters,  5.4%  textile-mill  operatives,  5.7%  farm  laborers;  but  by  1910 
only  18%,  4.4%  and  3.3%  respectively.21  Correspondingly  the  number  of 
typists,  stenographers,  professionals,  and  officials  grew  faster  than  women 
workers  in  other  fields,  faster  than  male  workers  in  commercial  fields,  and 
of  course,  much  faster  than  the  population.22  If  we  class  as  crude  labor 
the  work  done  by  mill-operatives,  janitresses,  laundresses,  servants  and 
waitresses,  office-attendants,  store-helpers,  clerks  and  copyists,  sales- 
women, telephone  operators,  seamstresses,  and  officially  designated  "la- 
borers," and  the  remainder  as  skilled,  then  69%  of  the  women  belonged 
to  the  former  class  in  1890,  but  only  63%  in  19 10.23  Though  classifica- 
tions are,  to  be  sure,  faulty  and  shifting  the  main  trend  of  female  labor 
is  as  here  suggested :  Women  have  increased  their  earnings  fully  as  much 
as  the  bulk  of  workers,  if  not  in  identical  fields,  certainly  by  leaving 
the  ranks  of  unskilled  labor. 

It  is  significant  in  this  connection  that  earnings  of  labor  rose  the  more 
the  higher  the  grade  of  labor  and  therefore  the  greater  the  pay  to  begin 
with.  "To  him  that  hath  shall  be  given"  is  an  old  adage.  And  there  is 
every  reason  to  believe  that  it  proved  true  also  during  the  last  quarter 
century  in  the  United  States.  In  the  textile  branches  spinners  and  weav- 
ers did  better  than  combers  and  crude  laborers.  The  latter  right  through 
receive  the  smallest  advance  of  wages,  especially  if  we  reckon  by  the  hour 
rather  than  by  the  week.24  Again,  between  1890  and  19 10  general  officers 
in  railroading  added  70%  to  their  daily  wages,  machinists  35%,  carpenters 
and  conductors  27%,  telegraph  operators  21.3%,  but  laborers  only  12%, 
office-clerks  9%,  station-hands  10%,  trackmen  20%,  enginemen  24%.25 
And  once  more:  Wage-earners  in  manufactures  gained  25%,  but  salaried 
employees  over  30%. 26  Telephone  companies  increased  the  pay  of  the 
one  class  17%,  of  the  other  56%  between  1902  and  1912,27  a  disadvantage 
for  the  former  that  could  scarcely  be  explained  away  by  questions  of 
accountancy  or  an  assumed  superior  standing  of  wage-earners  before  1902. 

21  Census  of  1910,  vol.  4,  Occupations,  pp.  54-56. 

22  Ibid. 

23  Ibid. 

24  See,  e.g.  Bulletins  128,  129,  and  134  of  Bureau  of  Labor  Statistics. 

25  Statistical  Abstract  for  191 1,  p.  287. 

26  Census  of  1910,  vol.  8,  pp.  32-33,  and  pp.  240  and  245. 

27  Report  of  Census  Bureau  on  Telephones  and  Telegraphs  for  1912,  p.  48. 


DISTRIBUTION  51 

To  condense  a  mass  of  facts  into  a  few  salient  points. 

(1)  Wages  as  a  whole  rose  32%  to  37%  between  1890  and  1910,  the 
upward  tendency  being  still  pronounced  today.  Up  to  the  turn  of  the 
century  it  was,  however,  first  downward  and  then  back  again  to  the  point 
of  starting.  Not  until  after  1900  did  wages  rise  distinctly,  and  at  no 
time  so  rapidly  as  since  the  crisis  of  1907. 

(2)  Wage-movements  have  varied  greatly  dependent  upon  the  fields 
of  production  one  might  study,  but  these  variations  are  part  of  the  re- 
distribution of  incomes.  Agricultural  workers  thus  fared  best,  and 
industrial  toilers  worst.  As  between  the  sexes  the  gain  is  perhaps  slighly 
in  favor  of  male  workers.  However,  women  bettered  their  lot  by  step- 
ping into  higher  grades  of  employment.  Taken  from  another  angle  wages 
rose  the  most  the  higher  the  quality  of  work  it  represented.  In  general 
those  least  productive  but  most  in  need  of  advancement  received  the 
smallest  advance.  Big  producers  in  responsible  positions  were  paid 
better  all  the  time. 

(3)  Hour-rates  of  pay  are  no  conclusive  evidence  of  income-changes  per 
year,  for  one  thing  because  of  a  steadily  curtailed  working  allowance  per 
week,  and  for  another  because  of  irregularities  in  employment,  etc.  On 
the  whole  wages  may  therefore  be  presumed  not  to  have  risen  more  than 
30%  to  35%  per  year.  This  applies  to  the  great  mass  of  employees,  not 
to  children,  professionals,  and  high-salaried  workers. 

III.  Profits.  Under  a  proprietary  regime  wages  will  always  repre- 
sent an  income  distinct  from  profits,  rent  and  interest.  The  chief  justi- 
fication of  this  division  is  historically  the  economic  order  prevailing  in 
England  at  the  time  economics  became  a  science,  and  for  practical  pur- 
poses the  fundamental  difference  between  incomes  due  to  personal  effort 
and  such  as  proceeds  from  rights  and  privileges  of  property.  Wages  are 
the  reward  of  labor.  The  other  shares  have  their  raison  d'etre  chiefly  in 
capital.  The  one  refers  to  income  per  individual,  the  second  to  income 
per  dollar  invested  or  capitalized  on  the  basis  of  loan-prices. 

One  broad  line  of  demarkation  runs  thus  between  wages  and  rentals 
(profit,  rent  proper,  and  interest).  A  second  may  be  drawn  so  as  to  leave 
profits  on  one  side  and  wages  and  rent  and  interest  on  the  other.  Profits, 
namely,  are  not  contractual  income.  Profits  mean  uncertain  proceeds 
from  enterprise  involving  risk,  besides  technical  leadership  or  capitalistic 
methods.  The  triad  on  the  opposite  side,  however,  implies  a  contract 
of  exchange  between  parties.     The  earnings  are  stipulated  beforehand. 

These  distinctions  will  serve  as  a  useful  reminder  at  the  outset  of  the 
peculiar  functions  and  powers  of  enterprise.  We  should  expect  in  an  highly 


52  RISING  COSTS  OF  LIVING 

progressive  age  of  rising  monetary  prices  that  liquid,  non-contracted  in- 
comes adjust  themselves  first  and  win  the  game,  that  profits  play  an  in- 
creasingly important  role  in  national  production  and  its  returns,  and 
that  enterprisers,  in  so  far  as  they  are  physically  distinct  from  wage- 
earners,  are  influenced  by  forces  not  directly  governing  the  employee. 

Statistical  lacunae  prevent  us  from  considering  the  course  of  indus- 
trial profits  of  individual  enterprises.  However,  since  numerically  they 
are  in  the  minority  and  financially  the  weakest  group  of  the  three  the 
omission  is  not  fatal.  The  trend  of  corporate  profits  and  those  of  the 
farming  population  may  be  accepted  as  sufficient  testimony  for  all  practi- 
cal purposes. 

As  to  the  trend  of  corporate  profits  we  may  judge  it  best  by  quota- 
tions of  stock  and  more  directly,  of  course,  by  dividends  or  by  reports  on 
surplus  reserves.  From  them  the  upward  course  of  profits  is  easily 
demonstrated.  Thus  the  Brookmire  Charts  give  average  annual  quota- 
tions for  twelve  industrial  stocks  as  follows.  Low  points:  28  in  1896, 
58  in  1899,  42  in  1903— a  year  of  depressions—,  86  in  1906,  79  in  1909, 
and  72  in  1913;  high  points:  40  in  1890  and  88  in  1913.28  The  common 
stock  of  forty  transportation  companies  stood  at  121  points  in  1890,  at 
85  in  1895,  at  134  in  1900,  at  250  in  1905,  and  at  248  in  191 1.29  Preferred 
stock  fluctuated  of  course  much  less,  but  the  upward  trend  is  about  the 
same.30  Interstate  railroads  paid  an  average  dividend  of  2%  on  common 
and  preferred  stock  between  1890-91,  and  of  5%  between  1911-12.31  Big 
business  in  most  fields  of  endeavor  improved  its  earnings  markedly. 
Stocks  went  up  as  profits  grew.  Over-capitalization  was  frequently  im- 
posed on  a  credulous  over-confident  public,  but  later  an  accumulated  sur- 
plus had  to  make  good  the  deficits.32  The  largest  corporations,  on  the 
other  hand,  increased  their  earnings  steadily.  Thus  United  States  Steel 
boasted  an  undivided  surplus  in  1902  equal  to  64%  of  the  aggregate  paid 
out  in  wages  and  salaries  that  year.  In  1907  the  surplus  amounted  to 
76%  of  the  wage-fund,  by  1911  to  97%  of  it.33  Standard  Oil  averaged 
12%  profits  on  capital-investments  between  1890  and  1892,  38%  during 

28  Chart  No.  117,  Jan.  10,  1914. 

29  Mitchell,  Wesley  C,  Business  Cycles,  p.  175.  See  also  his  article  in  Journal  of 
Political  Economy,  Feb.  1916. 

30  Ibid. 

31  Publications  of  Interstate  Commerce  Commission,  Division  of  Statistics,  for 
1912,  p.  34. 

32  On  over-capitalization  see,  for  instance,  Montague,  G.  H.,  Trusts  of  Today,  pp. 
110-14. 

33  Nearing,  Scott,  Income,  p.  220. 


DISTRIBUTION  53 

the  tri-ennial  1904-06,  and  almost  as  much  today.34  The  International 
Harvester  Company  made  5.34%  on  its  investments  in  1904,  8.73%  in 
1908,  and  11.51%  in  1911.35  Eight  anthracite  railroads,  after  acquiring 
control  over  the  Virginia  mines,  raised  the  minimum  quotations  of  their 
stock  from  62  points  in  1898  to  154  points  in  1913,  the  highest  points 
being  respectively  75  and  187. 36  The  tobacco-combine  paid  in  dividends 
between  1890  and  1908  a  sum  equal  to  ten  times  its  original  investment, 
so  that  capitalization  without  further  ado  could  be  increased  by  a  thou- 
sand per  cent.  From  1901  to  1913  it  averaged  12.5%  dividends  on  in- 
vestment, in  spite  of  the  laying  by  of  a  big  surplus-fund.37  According  to 
one  authority  the  net  profits  of  twenty-nine  "trusts,"  if  marked  by  one 
hundred  points  in  1902,  rose  to  103.5  points  the  next  year,  to  124.1  in 
1906,  and  to  137.7  points  in  1910.38 

Corporate  profits,  then,  formed  a  growing  part  of  industrial  produc- 
tion. This  is  brought  out  not  only  by  a  rising  rate  of  profit  for  particular 
concerns,  but  even  more  cogently  by  the  fact  that  while  corporations  pro- 
duced 63.3%  of  total  manufactured  values  in  1890,  they  contributed  in 
1910  over  77%.39  Both  the  rate  of  profit  per  dollar  of  investment  and  the 
share  of  industrial  enterprises  in  national  income  increased  materially. 
The  reasons  for  this  progress  were  on  the  one  hand  superior  productivity, 
on  the  other  superior  selling  and  price-determining  powers.  The  two 
usually  go  together.  One  is  loath  to  believe,  in  view  of  what  has 
already  been  said,  that  "no  trust  exists  by  virtue  of  its  superior  pro- 
ductive powers.  Every  one  depends  for  its  existence  upon  its  superi- 
ority in  buying  and  selling,  that  is  upon  its  power  over  prices.  "40  At  the 
same  time  one  cannot  deny  that  organization  and  tactics  in  selling  have 
had  much  to  do  with  recent  corporate  prosperity. 

Real  advantages  socially  salutary  were  gained  by  patents  and  trade- 
marks, large-scale  production,  and  improved  methods  of  marketing  goods. 
Patents  since  1890  were  taken  out  in  growing  numbers  on  thousands  of 
improvements  that  revolutionized  industry.41     The  records  of  the  Patent 

34  Report  of  Commissioner  of  Corporations,  Petroleum  Industry,  Part  II,  pp.  40 
to  43. 

36  Report  of  Commissioner  of  Corporations,  1913,  p.  23. 

36  Jones,  E.,  The  Anthracite  Coal  Combination,  p.  140. 

37  Report  of  Commissioner  of  Corporation,  Tobacco  Industry,  Part  II,  p.  378. 
See  also  pp.  14-20,  pp.  238-42. 

38  Journal  of  Political  Economy,  April  1912,  article  by  Prof.  Meade. 

39  Census  oi  1910,  vol.8. 

40  Carver,  T.  N.  Essays  in  Social  Justice,  p.  121. 

41  Annual  Report,  Commissioner  of  Patents,  for  1913. 


54  RISING  COSTS  OF  LIVING 

Office  constitute  an  illuminating  example  of  this  search  for  newer  and  bet- 
ter devices  in  production.  What  is  more,  corporations  bought  up  or  con- 
trolled indirectly  patents  on  technically  connected  processes  so  that  the 
less  energetic  could  not  compete.42  Again,  a  steady  enlargement  of  plant 
and  a  sweeping  concentration  of  management  led  to  greater  effectiveness 
of  the  material  agents  of  production,  to  higher  forms  of  specialization, 
to  continuity  of  operation,  cheaper  purchases  of  supplies  for  cash  or  credit, 
a  neater  adjustment  of  supply  to  demand,  a  reduction  of  waste  and  ex- 
penses for  freight,  retailing,  bill-collecting,  superintendency,  experimental 
work,  etc.,  etc.43  All  these  were  steps  to  economy  that  widened  the  margin 
of  profits. 

Again,  advertising  aided  in  the  awakening  of  new  demands  and  their 
focussing  upon  definite  makes  of  goods.44  If  for  instance  the  volume  of 
trade-marks  registered  at  Washington  tripled  between  1890-92  and  1910- 
12,45  this  indicates  the  extent  to  which  commodities  were  standardized 
in  quality,  form,  and  price.  Publicity  helped  to  uniformize  tastes. 
Nothing  has  proven  the  power  of  suggestion  so  forcefully  as  modern  ad- 
vertising in  the  daily  and  periodical  press,  in  vehicles  of  transportation, 
on  the  main  trade-arteries  of  the  modern  metropolis,  along  the  shores  of 
the  ocean  and  the  highways  overland.  The  new  art  of  multigraphing 
made  ubiquitous  advertising  possible,  and  this  in  turn  prepared  the  way 
for  million  dollar  sales  of  an  article  bought  for  a  nickel.  None  perceived 
the  power  of  advertising  more  clearly  than  the  leaders  of  big  business  and 
none  achieved  greater  results  with  it.46  To  create  a  demand  and  to  main- 
tain it  was  the  task  set  before  manufacturers,  and  by  exploiting  systemati- 
cally our  imitative  bent  they  gained  their  end,  in  the  first  place  to  increase 
profits  but  ultimately  to  lower  costs  and  to  raise  our  level  of  living.  Within 
the  period  here  under  discussion  the  American  bill  for  advertising  has 
grown  a  thousand  per  cent.  To-day  it  is  estimated  to  approach  the  billion 
dollar  mark.  In  1900  eighteen  thousand  daily  papers  and  periodicals 
drew  54%  of  their  revenue  from  paid  advertising.47     Between   1899 

42  See,  e.g.,  Report  of  Bureau  of  Corporation,  1915,  on  Farm-Machinery  Trade 
Associations,  pp.  112-13. 

43  For  a  discussion  of  trust-advantages  see  Montague,  H.  G.,  Trusts  of  Today, 
chap  2,  and  Van  Hise,  C.  R.,  Concentration  and  Control. 

44  The  functions  of  advertising  in  modern  business  are  admirably  brought  out  in 
Calkins'  and  Holden'  textbook  on  Modern  Advertising. 

45  Report  of  Commissioner  of  Patents  for  1913. 

46  See  various  Reports  of  Commissioner  of  Corporations  for  use  of  advertising  by 
"trusts." 

47  Taken  from  Calkins  and  Holden,  Modem  Advertising,  pp.  67-68. 


DISTRIBUTION  55 

and  1909  newspaper  receipts  for  "ads"  have  more  than  doubled.43  A 
random  inouiry  into  the  make-up  of  typical  magazines  has  recently 
shown  that  one-half  of  the  pages  are  devoted  to  advertisements,  of 
which  one-fifth  deals  with  necessaries  of  life,  one  quarter  with  luxuries, 
and  one-half  with  conveniences  for  personal  use.49 

Yet  one  is  bound  to  admit  that  not  all  super-profits  rested  on  merits. 
Not  all  capitalization  above  investment  redounded  at  once  to  public 
welfare.  Brute  tactics  and  unsocial  aims  had  their  say.  This  appears  not 
merely  from  rough  comparisons  of  cost  and  price  movements,  or  from 
modes  of  acquiring  control  over  natural  resources,  but  especially  in  the 
compulsorily  vented  records  of  big  business.  Chicanery  and  brow- 
beating, leeching  and  oppression,  merciless  strangling  and  deft  blows 
at  reputations  that  stood  in  the  way  of  exclusive  gains  form  part  of  the 
program  of  consolidation,  integration,  and  scientific  management.  The 
rival,  whether  producer  or  middleman,  was  brought  to  terms  somehow. 
Refractory  dealers  were  cajoled  into  submission.  Markets  were  sur- 
reptitiously stolen  away  from  daring  challengers  of  a  "  trust, "  or  financial 
pressure  applied  such  as  the  ordinary  firm  could  not  withstand.50  It 
would  go  too  far  to  enumerate  all  such  underhanded  procedures,  nor 
is  this  the  occasion  for  it.  But  a  summary  of  sins  drawn  up  by  one 
writer  may  serve  to  indicate  the  scope  of  illegitimacy  that  accompanied 
corporate   development.     Leading   forms   of   unfair   competition   were 

(I)  Local  price-cutting;  (2)  Operation  of  bogus  "independent"  con- 
cerns; (3)  Special  competitive  devices;  (4)  Conditional  requirements; 
(5)  Exclusive  sales  and  purchase  arrangements;  (6)  Rebates  and  prefer- 
ential arrangements;  (7)  Acquisition  of  exclusive  or  dominant  control 
of  machinery  or  goods  used  in  the  manufacturing  process;  (8)  Mani- 
pulation;  (9)   Black  lists,  boycotts,  white  lists,  etc.;   (10)   Espionage; 

(II)  Coercion,  threats,  intimidation,  etc.;  (12)  Interference  with  con- 
tracts and  business  of  competitors.51  In  the  working  out  of  these  unfair 
means  the  natural  tendencies  toward  concentration  of  business  and  the 
redistribution  of  incomes  were  accentuated.  Price  facts  assumed  a 
sombre  hue  that  otherwise  would  not  have  been  found  offensive. 

48  Census  of  1910,  vol.  10,  p.  781. 

"Article  by  Prof.  Haney,  Lewis  H.,  in  Journal  of  Political  Economy,  vol.  19, 
1911. 

50  For  examples  of  unfair  competition  see,  e.g.,  Report  of  Bureau  of  Corporations 
on  Farm-Machinery  Trade  Associations,  1915;  Reports  of  Commissioner  of  Corpora- 
tions on  Petroleum  Industry,  Part  I,  chap.  5,  and  Part  II,  p.  57;  Lumber  Industry, 
Part  III,  pp.  6-67,  180,  469;  Tobacco  Industry,  Part  II,  p.  I;  International  Harvester 
Company,  p.  31. 

61  Annals  of  American  Academy  of  Political  and  Social  Science,  July  1916,  pp.  37-54. 


56 


RISING  COSTS  OF  LIVING 


TABLE  12 
GROSS  RETURNS  AND  NET  PROFITS  IN  AGRICULTURE,  1899  AND  1909. 

1899  1909 

A .    Gross  Returns  (Millions  omitted) 


Value  of  Agricultural  Output  except  Timber. 
Fed  to  Live  Stock 


Appreciation  of  Real  Estate. 


$4740 
975 


S3765 
400 


$4165 


$8500 
2125 


S6375 
1800 


$8175 


B.  Expenses. 

(1)  Interest  on  Farm  Lands  except  as  under  (3)  and  (4) 

(2)  Interest  &  Depreciation  on  Non-Residential  Buildings... 

(3)  Interest  on  Mortgages  (Farm) 

(4)  Rents  paid  by  Tenants 

(5)  Wages 

(6)  Interest  and  Depreciation  on  Machinery 

(7)  Interest  and  Depreciation  on  Motive  Power  (Horses  & 

Mules) 

(8)  Fertilizer  (Commercial) 

(9)  Miscellaneous  (Seed,  Water,  Insurance,  Power,  etc.,  etc. 


$637 

$1232 

210 

380 

96 

208 

113 

420 

780 

1420 

135 

230 

110 

260 

53 

115 

250 

600 

$2384 


$4865 


C.    Net  Profits. 


$3310 
6.18 


Total 

Number  of  Farmers 

Net  Profits  per  Average  Farmer:  In  1899,  $310;  in  1909,  $535 
Increase  per  Head:  72%. 

The  trend  of  farmers'  profits  may  be  discovered  by  a  glance  at  Table 
12.52  In  the  absence  of  direct  data  this  calculation  will  do,  for  it  pic- 
tures the  situation  fairly  well.  From  the  total  value  of  agricultural 
produce  as  computed  by  the  Census  Bureau  we  deduct  the  principal 
expenses  in  order  to  find  net  profits.  The  gross  returns  consist  of  all 
products  except  timber  cut  on  farms,  which  however  represents  a  detail, 
and  to  this  we  add  an  average  annual  appreciation  of  real  estate  values. 
The  value  of  crops  fed  to  live  stock  must  be  deducted  because  the  latter 
itself  forms  part  of  the  aggregate  agricultural  product. 


62  All  data  were  taken  from  Census  for  1910,  vol.  5,  from  volumes  on  Agriculture, 
and  Valuation  and  Taxation  for  1890,  and  vol.  5  of  Census  of  1900. 


DISTRIBUTION  57 

So  far  the  credit  side  of  the  ledger.  On  the  debit  side  we  have  interest 
and  rents  actually  paid  on  mortgages  and  tenures  of  land,  an  interest- 
charge  on  owned  farms  whose  capital  might  from  the  group  standpoint 
have  been  invested  elsewhere  at,  say,  6%;  furthermore  interest  and 
depreciation  charges  on  machinery  and  motive  power,  hire  of  labor,  ferti- 
lizer, and  miscellaneous  costs  on  which  no  data  exist.  By  allowing  a  lib- 
eral sum  on  this  latter  account  we  are  able  to  estimate  total  costs  within 
reasonable  limits.  The  costs  thus  found  are  deducted  from  gross  returns 
and  the  net  profit  divided  by  the  number  of  farmers  in  question.  At  any 
one  date  the  net  profits  of  the  average  farmer  will  thus  appear. 

During  the  decade  1899  to  1909  the  average  farmer  raised  his  profits 
about  70%,  or,  in  actual  amounts,  from  $310  to  $535.  Marked  varia- 
tions in  different  branches  of  agriculture  must,  of  course,  be  taken 
for  granted.  It  is  also  meet  to  allow  for  inevitable  errors  of  calculation, 
say,  to  the  extent  of  10%  to  20%.  But  even  supposing  that  average  net 
profits  did  not  rise  more  than  50%  this  would  still  represent  a  gain  few 
wage-earners  could  boast  !52a 

Before  the  turn  of  the  century  farmers  barely  held  their  own,  on  ac- 
count of  falling  food-prices  while  commodities  rose.53  But  after  that  date 
their  position  improved  rapidly.  This  is  borne  out  indirectly  by  the 
gradual  liquidation  of  debts  in  mortgages  popularly  referred  to;54  by  the 
spread  of  large-sized  farms  whose  profits  exceed  those  of  smaller  units;55 
and  more  definitely  by  a  comparison  of  the  value  of  acre-yields  for  1899 
and  1909  with  the  price-index  of  seventy  commodities  bought  by  farmers, 
such  as  implements,  personal  outfits  of  wear,  building  materials,  chemi- 
cals, house  furnishings,  etc.  The  Department  of  Agriculture  has  put  the 
gain  by  this  route  of  reasoning  at  44%,  without  indeed  dwelling  on  the 
farmers'  advantages  as  consumer  of  foods.56 

62a  E.  A.  Goldenweiser  in  the  American  Economic  Review  (April  1916)  puts  the  net- 
income  of  the  average  farmer  for  1909  at  $402  exclusive  of  earnings  of  capital,  which 
are  calculated  to  be  $322,  Streightoff ,  in  his  Distribution  of  Incomes,  finds  that  in  1900 
over  one-half  of  the  farmers  had  less  than  $600  gross-income. — The  Census  of  1910 
(vol.  5,  Intro.,  p.  131)  estimates  the  average  labor-income  for  each  "gainfully  oc- 
cupied" in  agriculture  at  $288. — In  a  survey  of  749  farms  in  the  state  of  New  York, 
made  in  1908-09  the  average  turned  out  to  be  $415  per  farmer  (see  Cornell  University 
Agricultural  Experiment  Station,  Bulletin  245,  March  1911).  On  that  basis  the  net 
earnings  of  the  average  farm  in  the  United  States  would  have  been  $380. 

63  See  Bulletin  114  of  Bureau  of  Labor  Statistics,  p.  12. 

64  Abstract  of  Census  of  1910,  pp.  292-93. 

K  Ibid.,  p.  303.  On  advantage  of  large-scale  farming  see  Bulletin  295  of  Agri- 
cultural Experiment  Station,  Cornell  University. 

'•Annual  Report,  Dep't  of  Agriculture,  1911,  pp.  650-56. 


58  RISING  COSTS  OF  LIVING 

IV.  Rentals.  The  rise  of  rents  is  reflected  best  in  real  estate  values 
and  their  movements  during  this  period.  It  is  significant  for  that  reason 
that  between  1890  and  1910  the  value  of  assessed  real  estate  rose  174%, 
or  about  as  fast  as  the  value  of  agricultural  produce.57  But  though  farm 
values  doubled,  site  values  in  the  city  went  up  still  more.  In  Greater 
New  York,  for  instance,  values  between  1906  and  1912  rose  from  three  and 
one-half  billions  to  over  four  and  one-half  billions,  improvements  accoun- 
ting for  but  60%  of  the  difference.58  In  Boston  site  values  doubled  be- 
tween 1889  and  1913.59  Excepting  Philadelphia  all  big  cities  increased 
the  average  number  of  inmates  per  dwelling.  That  is  homes,  instead  of 
growing  larger,  gave  way  to  tenements  and  small  apartments  built  to  suit 
modern  tastes  for  comfort  and  leisure.60  Rents  rose  per  square  foot  and 
farm  tenantry  increased.  A  greater  density  of  population  could  not  well 
mean  anything  else,  whatever  the  benefits  of  rapid  transit,  accessibility 
to  business  centers,  superior  schools,  a  greater  variety  of  amusements, 
and  so  on. 

Unlike  rents  proper  however  interest-rates  did  not  rise  so  universally 
nor  so  strongly.  The  demand  for  capital  has  only  within  the  last  half 
dozen  years  outstripped  the  supply.  Only  then,  it  would  seem,  did  op- 
portunities for  investment  along  industrial  lines  increase  more  rapidly 
than  the  incentive  for  people  to  save.  Or,  put  differently,  the  desire  for 
self-improvement  and  additional  future  returns  promised  by  technical 
improvements  and  the  rise  of  new  nations  waxed  stronger,  till  at  last 
interest  rates  had  to  rise.61  But  in  addition  they  were  affected  by  currency 
expansion,  so  that  from  two  main  causes  capital  in  various  fields  was  re- 
priced. Long-term  bonds  fell  so  as  to  raise  actual  rates  of  interest  higher 
than  the  general  price-level.62  Capital  is  in  eager  demand  especially  to- 
day. It  is  evidenced  by  the  fact  that  between  1890-92  and  1909-11  the 
aggregate  of  stocks  and  bonds  newly  listed  at  the  Stock  Exchange  rose 
from  $300,000,000  to  $850,000,000,  most  of  the  flotations  going  into 

57  Bulletin  of  Bureau  of  Census  on  "Assessed  Valuation  of  Property,"  1915. 

58  Nearing,  Scott,  Reducing  the  Cost  of  Living,  pp.  187-88. 

59  Nearing,  Scott,  Income,  p.  156. 

60  Abstract  of  Census  of  1910,  p.  261. 

61  See  Patten's  Reconstruction  of  Economic  Theory,  where  high  prices  of  consumable 
goods  are  attributed  partly  to  the  shrinkage  of  loanable  capital  (chapter  12):  "If 
greater  personal  efficiency,  a  higher  wage,  less  loanable  capital  and  a  higher  rate  of  in- 
terest are  parts  of  a  complementary  group  of  changes,  there  would  result  from  their 
joint  effect  a  new  adjustment  of  prices — "  (p.  68). 

62  Mitchell.  Wesley  C,  Business  Cycles,  pp.  142-43.  See  also  Clark,  Walter  E., 
The  Cost  of  Living,  pp.  109-118. 


DISTRIBUTION 


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60  RISING  COSTS  OF  LIVING 

public  utilities  and  municipal  improvements.63  Manufacturing  corpora- 
tions, furthermore,  increased  their  bonded  indebtedness  in  the  last  decade 
by  135%,64  railroads  by  100%,65  cities  of  thirty  thousand  population  or 
over  by  decidedly  more.66  The  average  rate  of  interest  paid  by  inter- 
state carriers  fell  meanwhile  from  4.54%  to  3.85%,  though  of  late  the 
trend  is  the  other  way.67  City  bonds  have  been  placed  at  higher  rates 
notably  since  1907.  Thus  the  average  rate  for  1902  was  4.69%,  but  for 
1912,  5.57%.68  Federal  bonds  alone  yielded  a  progressively  lower  rate 
counting  from  1890  on,69  for  well-known  reasons  that  will  not  be  always 
effective. 

The  case  of  profits  and  rentals  may,  then,  be  stated  as  follows:  (1) 
Corporate  profits  rose  markedly  per  dollar  of  capital  originally  invested, 
and  besides  form  a  growing  part  of  national  income.  (2)  Farmers  gen- 
erally bettered  their  earnings  by  50%,  though  some  groups  must  have 
done  better  and  others  not  nearly  so  well.  (3)  It  may  be  reasonably  as- 
sumed that  large  corporations  profited  more  than  individual  enterprisers 
in  trade  and  manufacture,  and  that  wage-earners  increasingly  shared  in 
these  super-profits,  being  indemnified  thus  in  one  quarter  for  losses  sus- 
tained in  their  own  vocation.  However,  the  masses  of  crude  labor  could 
not  have  so  benefited,  while  on  the  other  hand  all  laborers,  as  already 
shown,  received  some  new  goods  in  lieu  of  those  reduced  by  changes  in 
production.  (4)  Soil  and  site  uses  alike  became  dearer,  and  more  so  than 
the  majority  of  commodities.  In  the  country  tenantry  spread,  but  not 
in  the  city.  (5)  Broadly  speaking  interest-rates  fell  in  the  first  half,  and 
rose  during  the  second  half,  of  our  period.  Also:  the  funded  debt  of 
business  grew  faster  than  national  income,  due  to  new  modes  of  pro- 
duction and  the  gain  of  intangible  services  on  material  wealth.  (6) 
The  facts  of  income-changes  so  far  presented  explain  why,  as  shown 
in  Figure  3,  national  wealth  grew  chiefly  through  appreciation  of  land 
values.70  As  a  result  of  the  industrialization  of  capital  the  " circulating" 
kind  increased  faster  than  the  "fixed,"  thus  constituting  a  growing 
share  of  total  production.     But  simultaneously  the  replacement  fund 

63  Mitchell,  Business  Cycles,  p.  408. 

64  See  Reports  of  Commissioner  of  Internal  Revenue  on  corporation-tax. 

85  Statistics  on  railroads  in  Statistical  Abstracts. 

86  Bureau  of  Census  on  County  and  Muncipal  Indebtedness  (1890-1913),  1915. 
«7  Statistical  Abstract  for  1913,  pp.  271-72. 

68  Bureau  of  Census,  Financial  Statistics  of  Cities,  over  30,000  Population  1912, 
pp.  19,  72,  and  151. 

69  Treasury  Report  for  1914. 

70  For  method  of  calculation  used  see  note  to  Table  9,  p.  39. 


DISTRIBUTION  61 

would  shrink  in  favor  of  progressive  business.  All  this  finally  proved 
a  boon  to  society  at  large,  but  temporarily  many  incomes  were  impaired. 

V.  Factorial  Distribution.  It  will  be  of  interest  now  to  compare  with 
incomes  per  average  worker  in  a  given  field  the  totals  going  to  each  "share" 
as  classically  understood.  Once  we  have  defined  the  term  "national 
income"  and  the  shares  to  be  measured  this  can  be  readily  done. 

As  for  the  dividend  we  may  mean  by  it,  in  the  first  place,  the  sum  total 
of  goods  and  direct  services  produced  by  a  people  within  a  time-unit  such 
as  a  year.  This  would  constitute  the  gross  dividend.  Hence  from  it  we 
have  to  deduct  the  goods  consumed  during  the  time  of  production  in  order 
to  find  net  income.  Secondly  we  may  distinguish  "dividend"  from  "in- 
come," meaning  by  the  latter  the  sum  total  of  book  incomes  of  all  in- 
dividuals composing  the  nation.71  The  first  viewpoint  would  be  social, 
the  second  competitive.  In  one  case  we  should  be  measuring  actual  goods, 
in  the  other  merely  the  values  that  appear  on  each  man's  ledger  and  con- 
stitute his  income  in  terms  of  currency.  In  the  third  place,  however,  we 
may  mean  by  the  net  income  of  society  either  the  surplus  left  after  a 
year's  consumption  or  the  difference  between  gross  product  and  re- 
placement costs.  From  the  national  standpoint  only  the  savings  may 
count,  but  the  individual  calls  his  income  net  as  far  as  it  is  available 
for  consumption.72  He  wants  a  stream  of  gratifications  and  procures 
it  by  using  and  destroying  wealth:  Governments  count  what  remains 
after   these   gratifications   have   been   secured.     Their   stock-taking   is 

71  This  distinction  is  observed  strictly  by  Prof.  King  in  his  Wealth  and  Income  of 
the  People  of  the  United  States  (pp.  120-22).  See  also  Marshall,  A.  in  his  principles  of 
Economics,  p.  562.  Adam  Smith  called  this  the  "gross-revenue"  {Wealth  of  Nations, 
Book  II,  chap  2).  Prof.  Davenport  in  his  Economics  of  Enterprise  considers  the 
national  dividend  made  up  of  (1)  the  output  of  immediately  consumable  goods;  (2) 
human  services;  (3)  services  of  durable  consumption  goods;  (4)  unmarketed  price-facts, 
e.g.  work  of  women  in  the  home;  (5)  incomes  from  privilege,  place,  power,  repute,  etc. 
According  to  Pigou,  Wealth  and  Welfare,  the  national  dividend,  comprises  "every- 
thing that  people  buy  with  money-income,  together  with  such  services  as  a  man  obtains 
from  a  house  owned  and  occupied  by  himself"  (pp.  48-49).  Prof.  Smart,  W.,  in  his 
Studies  in  Economics  puts  it  more  simply:  "the  new  wealth,  after  providing  for  wear 
and  tear  and  ultimate  replacement  of  capital — "  (pp.  13  and  235).  For  other  defini- 
tions see  Rau,  K.  H.  Grundsaetze  der  V olkswirtschafts  Lehre,  3.  ed.,  pp.  265-68; 
Schmoller,  G.  Grundriss  der  Allgemeinen  Volkswirtschaft — vol.  2,  p.  421  (ed.  1904); 
Hobson,  J.  A.,  Work  and  Wealth,  p.  30.  For  objections  to  defining  concrete  goods  as 
income  see  Fisher,  I.,  Capital  and  Income,  where  "the  income  of  a  community"  is  de- 
fined as  the  "total  flow  of  services  from  all  its  instruments"  (p.  101).  See  also  pp 
105-118. 

72  The  classics  stressed  this  net  income  of  society,  of  course.  See  notably  Ricardo, 
Principles  of  Political  Economy  and  Taxation,  chap.  26. 


62  RISING  COSTS  OF  LIVING 

somewhat  different  from  the  family's  because  of  different  contingencies 
or  aims. 

Now,  expediency  is  all  in  favor  of  the  gross-income  concept,  for  we 
cannot  measure  the  distribution  of  goods,  but  only  that  of  values  ex- 
pressed in  dollars  and  cents.  In  the  second  place  we  cannot  measure 
individual  incomes,  but  only  group-incomes  whose  interlockings  escape 
our  observation.  That  as  between  wages,  profits,  rent  and  interest  there 
are  duplications  on  a  large  scale  must  not  deter  us.73  Similarly,  since 
ours  is  a  distributive  study,  book  incomes  mean  more  than  a  dividend  in 
the  sense  first  mentioned.  It  is  the  money-income  earned  for  consump- 
tion or  investment  at  the  option  of  the  group  that  interests  us,  not  net- 
income  by  national  standards  or  net-income  in  the  shape  of  concrete 
goods  or  services.  This  gross  money  income  is  ascertainable  from  stat- 
istics either  on  earnings  of  labor,  enterprise,  and  capital  or  on  production 
directly.  In  the  long  run  these  two  cannot  go  far  apart,  however  inevi- 
able  a  discrepancy  because  of  miscalculations  or  the  artificiality  of  our 
time-unit. 

Having  decided  upon  four  units  in  distribution  we  define  them  as 
follows.  (1)  Wages  are  payments  to  labor  for  its  share  in  production, 
the  mode  of  payment  or  regularity  of  receiving  it  not  being  points  in 
question.  It  doesn't  matter  whether  wages  are  paid  out  by  the  month 
or  week  or  hour,  whether  they  are  paid  partly  in  kind  or  entirely  in 
cash,  or  whether  legally  they  are  called  salary  or  fee  or  stipend.  In  all 
instances  a  return  for  labor,  that  is  for  personal  effort  contracted  for  on 
fixed  terms  expressedly  or  implicitly,  constitutes  a  wage.  Hence  physi- 
cians must  be  classed,  like  superintendents  of  industrial  plants  or  of  a 
whole  railroad  system,  with  day-laborers,  even  though  financially, 
vocationally,  and  perhaps  otherwise  their  interest  have  little  in  common. 
(2)  Profits  are  the  return  of  enterprise,  individual  or  corporate.  They 
represent  partly  monopoly-advantages  and  so  far  resemble  or  are  rent. 
But  it  will  be  convenient  to  differentiate  them  from  rent  proper  since  this 
in  large  part,  like  interest,  represents  a  share  created  by  property-rights 

73  On  the  difference  between  production  (social)  and  transfer  (individual)  income 
see  Philippovich,  Eugen  Grundriss  der  Politischen  Okonomie,  vol.  1,  pp.  313-314.  The 
terms  primary  and  secondary  distribution  are  discussed  also  there,  pp.  271-75;  and  by 
Prof.  Lexis,  W.  Allgemeine  Volkswirtschaftslehre,  pp.  142-43,  by  Wagner,  A.,  Griitidle- 
gung  der  Politischen  Okonomie,  3.  ed.,  vol.  1,  pp.  293-95,by  Rau,  Grundsaetze  der  Volks- 
wirtschaftslehre, 3.  ed.,  pp.  269-70,  313,  and  in  fact  by  most  German  economists  in  con- 
nection with  property-aspects  or  taxation.  English  and  American  writers  as  a  rule  do 
not  dwell  on  personal  distribution.  See,  however,  Fetter,  F.  A.,  Principles  of  Economics, 
1904  pp.  404-10  for  a  brief  enumeration  of  "methods  of  personal  distribution." 


DISTRIBUTION  63 

rather  than  by  creation  of  wealth.  (3)  Interest  is  the  price  of  the  use  of 
capital  or  money.  We  measure  it  always  in  terms  of  a  unit  of  currency 
and  in  percentages  of  it.  Thus  the  rate  on  $100  is  six  per  cent  per  annum. 
(4)  Rent  is  a  differential  product,  or  the  price  paid  for  the  use  of  a  specific 
capital-good  such  as  land,  mines,  yachts,  inventions,  rights  of  way, 
and  so  on. 

The  modus  operandi  in  estimating  incomes  is  dictated  partly  by  our 
definition  of  national  income  and  its  functional  shares,  and  partly  by  the 
nature  of  our  statistical  material.74  Since  distribution  is  the  subject  only 
the  values  actually  changing  hands  should  be  considered,  not  sums  that 
accrue  in  theory  merely.  Thus  it  is  quite  gratuitous  to  calculate  interest- 
charges  on  $200,000,000,000  because  this  represents  national  wealth,  and 
then  to  call  them  income.  Not  what  from  an  individual  viewpoint  might 
be  levied  but  what  really  is  paid  concerns  us.  Again,  since  incomes  are 
to  be  found  directly  from  average  earnings  of  laborers  and  enterprisers, 
it  becomes  necessary  to  make  sure  of  the  number  of  money-earners.  Not 
all  "gainfully  occupied"  earn  money.  Many  of  them  simply  produce 
and  help  support  themselves  without  drawing  money-pay.  Hence  de- 
ductions will  have  to  be  made  to  arrive  at  the  true  number  of  earners  in 
the  narrower  sense.75  Or,  again,  in  computing  total  profits  not  all  net- 
earnings  of  corporations  should  be  included,  but  only  the  dividends 
actually  declared  and  received  by  share-holders.  What  is  put  to  a  reserve- 
fund  is  not  "income"  for  our  purposes. 

Statistical  limitations  are  serious  but  they  do  not  make  a  rough  cal- 
culation of  shares  or  total  social  income  impossible.  We  find  wages  by 
calculating  first  the  number  of  wage-earners  and  multiplying  it,  secondly, 
by  the  average  annual  wage  of  each.  We  find  profits  by  counting  the 
number  of  individual  enterprisers,  dividing  them  into  farmers  and  other 
enterprisers,  taking  the  average  net  income  of  each  and  multiplying  it  by 
the  number  for  each  group,  and  by  adding  to  these  sums  the  dividends 
paid  out  by  corporate  enterprise.  We  find  rentals  by  lumping  the  pro- 
ceeds of  rent  and  interest  in  so  far  as  actually  or  presumably  paid  in  the 
course  of  production  or  consumption.  Finally,  we  find  the  relative 
standing  of  each  factorial  share  by  comparing  it  with  the  number  of  wage- 
earners  and  enterprisers  at  the  dates  in  question,  except  that  for  cor- 
porate profits  and  rentals,  of  course,  there  are  no  distinct  vocational 
classes. 

74  For  main  steps  in  our  calculation  see  Appendix  to  this  chapter. 
76  See  note,  etc.,  Table  5,  p.  20. 


64 


RISING  COSTS  OF  LIVING 


TABLE  13 
THE  REDISTRIBUTION  OF  INCOMES  BETWEEN  1890  AND  1910 
General  Data  1890  1910 


Population 

Number    of    Gainfully   Occupied    (Census 

Figures) 

Number  of  Money-earners 

National  Wealth 

National  Income  (Actual  and  Gross) 


62  ,600  ,000 

23  ,318  ,000 

22,451,000 

$65  ,000  ,000 ,000 

$12  ,500  ,000 ,000 


92  ,000  ,000 

38,167,000 

35  ,806 ,000 

$175  ,000 ,000 ,000 

$31,400,000,000 


B.    Numerical  and  Financial  Strength  of  Income  Groups  in  Percentages  of  Totals. 


Per  Cent  of  All 

Per  Cent  of  All 

Money- 
earners 
1890 

Income 
1890 

Money- 
earners 
1910 

Income 
1910 

Wage-earners 

65  .2% 

1.6% 
24% 

0% 

9.2% 

0% 

55  .9% 

3.1% 

10.8%] 

f26.6% 
15  .8%  J 
14  .4% 

70 .6% 
1-9% 

17  .3% 
0% 

10 .2% 
0% 

51     % 

Fee  Earners 

2.9% 

Farmers 

io  %1 

7    % 
14.8% 

Corporations 

>31 .8% 

Other  Enterprises 

Capital  and  Land 

14.2% 

Average  Wage  per  Adult 
Earner  Annually 

$41 

59 

$645 

C.     Factorial  Shares  in  Percentages  of  Actual  National  Gross  Income. 


Labor  (with  Fee  Earners) . 

Enterprise 

Land  and  Capital 


1910 

54  % 
31 .8% 
14  .2% 


The  leading  facts  of  redistribution  thus  appear  in  Table  13.  It  will 
be  seen  that  between  1890  and  1910,  while  the  population  increased  47%, 
the  number  of  gainfully  occupied  as  defined  by  the  Bureau  of  the  Census 
increased  63%,  the  number  of  money-earners  about  60%,  national  wealth 
160%  to  170%,  and  national  income  from  150%  to  160%.  We  repeat, 
these  like  all  preceding  or  subsequent  figures  must  be  accepted  with  cau- 
tion, for  the  chances  of  error  through  many  causes  are  great,  but  they 
indicate  the  trend  of  development  and  the  nature  of  distributive  changes. 

The  number  of  wage-earners  grew  120%,  that  of  fee-earners  94%,  of 
farmers  13%,  and  of  other  enterprisers  115%.  Since  farmers,  however, 
make  up  a  much  larger  element  than  these  "other  enterprisers"  the  av- 
erage increase  for  all  was,  as  stated,  60%.  As  to  incomes,  labor  received 
59%  of  the  total  in  1890,  and  54%  in  1910.     Enterprise  raised  its  quota  in 


"Ft  GintE   T".     5««  Tubl«    13 

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Xvftwn  -Vo  a   Scute 

Clonal  Gross, Inconn,  1S90,  #1Z.  500,  000,000 


~Hv.\'\ otioI    G*o«.&Xr\c<»m«,  1  9 1 0,  #>31, 400,000,000 


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DISTRIBUTION  65 

proportion,  while  rentals  remained  stationary.  Income  bounded  ahead  of 
population  not  only  in  terms  of  money,  but  quantitatively  as  well,  for  the 
price-level  rose  much  less  than  national  income.  Labor  loses  in  two 
respects,  namely  first  by  getting  a  smaller  percentage  of  the  social  income, 
and  secondly  by  forming  a  larger  part  of  the  earners.  On  the  other 
hand  it  gained  in  having  more  to  consume  in  actual  variety  and  volume 
of  goods,  and  in  participating  more  generally  in  the  proceeds  of  enter- 
prise. Barring  the  lowest  wage-classes  they  doubtless  shared  increas- 
ingly in  profits  through  stocks  or  bonds.  But  this  does  not  detract 
from  the  significance  of  the  fact  that  profits  did  gain  on  wages,  that 
particularly  corporations  claim  a  larger  and  larger  part  of  the  social  in- 
come, and  that  the  number  of  enterprisers  recognizable  as  such  de- 
creased relatively. 

Rent  proper  received  a  somewhat  larger,  but  interest  a  somewhat 
smaller,  part  of  the  grand  total;  hence  by  blending  the  two  under  the 
caption  "rentals"  we  make  their  share  virtually  constant.  Indeed, 
the  cardinal  point  brought  out  by  all  the  data  for  redistribution  is  not  the 
rising  importance  of  land  and  capital-funds,  but  the  ascendancy  of 
business  rents,  i.  e.,  the  preponderating  influence  to-day  of  monopoly. 
This  is  the  lesson  of  Figure  4.76 

Crude  labor  in  particular  fared  badly  because  supplies  of  it  often  ex- 
ceeded demand,  or  because  for  lack  of  organization  men  could  not  enforce 
their  rights,  or  because  coming  from  a  lower  material  civilization  in 

76  For  a  computation  of  factorial  shares  closely  approximating  our  own  see  King, 
Wealth  and  Income  of  People  of  the  United  States,  pp.  156-160.  The  percentages  of 
each  share  for  1890  and  1910  are  as  follows: 


Wages 

Interest 

Rent 

Profits 

Total  Income 

1890 

53.5% 

14.4% 

7.6% 

24.6% 

$12,082,000,000 

1910 

46.9% 

16.8% 

8.8% 

27.5% 

$30,529,000,000 

Rent  here  does  not  include  the  "hire  of  buildings  or  improvements,"  and  inter- 
est is  defined  as  price  for  use  of  capital-goods  i.e.,  goods,  used  in  the  further  production 
of  wealth,  hence  excludes  rent  on  homes.  Since  Prof.  King's  modus  operandi  is  differ- 
ent from  that  here  resorted  to  the  substantial  agreement  of  results  is  the  more 
noteworthy.  For  best  data  on  income  distribution  in  1890  see  Spahr,  Ch.  The  Present 
Distribution  of  Wealth  in  the  United  States,  where  the  national  income  is  estimated  at 
$10,800,000,000.  Professor  Scott  Nearing  (Income)  shows  figures  for  wage  and 
property- incomes  not  far  out  from  those  of  Prof.  King  and  those  here  advanced.  For 
occupational  incomes  see  particularly  the  repeatedly  quoted  study  by  Prof.  Streightoff, 
Distribution  of  Incomes  in  the  United  States,  1912  (vol.  52,  No.  2  of  Studies  in  His- 
tory, Economics  and  Public  Law,  Columbia  University). 


TVctoVial    J)istircbutio-n     o£   Income,    in 

i890\  19/0 

^TumcYica\  Strength    of  Wft.o«r  Earners    coicl 

En-tcY^^ri  sets 

3**ci\*m  to  *  Scale 


"Xattonal  OTos&Xncome,  1S90,  #1£,SOQ,  OoqCOO 


-v 


*Wag<  ana  F«?<?  torncvj,  66.S*% 


-* y— 

Eni  ?vt>r»sers  33.2. 


DISTRIBUTION  65 

proportion,  while  rentals  remained  stationary.  Income  bounded  ahead  of 
population  not  only  in  terms  of  money,  but  quantitatively  as  well,  for  the 
price-level  rose  much  less  than  national  income.  Labor  loses  in  two 
respects,  namely  first  by  getting  a  smaller  percentage  of  the  social  income, 
and  secondly  by  forming  a  larger  part  of  the  earners.  On  the  other 
hand  it  gained  in  having  more  to  consume  in  actual  variety  and  volume 
of  goods,  and  in  participating  more  generally  in  the  proceeds  of  enter- 
prise. Barring  the  lowest  wage-classes  they  doubtless  shared  increas- 
ingly in  profits  through  stocks  or  bonds.  But  this  does  not  detract 
from  the  significance  of  the  fact  that  profits  did  gain  on  wages,  that 
particularly  corporations  claim  a  larger  and  larger  part  of  the  social  in- 
come, and  that  the  number  of  enterprisers  recognizable  as  such  de- 
creased relatively. 

Rent  proper  received  a  somewhat  larger,  but  interest  a  somewhat 
smaller,  part  of  the  grand  total;  hence  by  blending  the  two  under  the 
caption  "rentals"  we  make  their  share  virtually  constant.  Indeed, 
the  cardinal  point  brought  out  by  all  the  data  for  redistribution  is  not  the 
rising  importance  of  land  and  capital-funds,  but  the  ascendancy  of 
business  rents,  i.  e.,  the  preponderating  influence  to-day  of  monopoly. 
This  is  the  lesson  of  Figure  4.76 

Crude  labor  in  particular  fared  badly  because  supplies  of  it  often  ex- 
ceeded demand,  or  because  for  lack  of  organization  men  could  not  enforce 
their  rights,  or  because  coming  from  a  lower  material  civilization  in 

76  For  a  computation  of  factorial  shares  closely  approximating  our  own  see  King, 
Wealth  and  Income  of  People  of  the  United  States,  pp.  156-160.  The  percentages  of 
each  share  for  1890  and  1910  are  as  follows: 


Wages 

Interest 

Rent 

Profits 

Total  Income 

1890 

53.5% 

14.4% 

7.6% 

24.6% 

$12,082,000,000 

1910 

46.9% 

16.8% 

8.8% 

27.5% 

$30,529,000,000 

Rent  here  does  not  include  the  "hire  of  buildings  or  improvements,"  and  inter- 
est is  denned  as  price  for  use  of  capital-goods  i.e.,  goods,  used  in  the  further  production 
of  wealth,  hence  excludes  rent  on  homes.  Since  Prof.  King's  modus  operandi  is  differ- 
ent from  that  here  resorted  to  the  substantial  agreement  of  results  is  the  more 
noteworthy.  For  best  data  on  income  distribution  in  1890  see  Spahr,  Ch.  The  Present 
Distribution  of  Wealth  in  the  United  States,  where  the  national  income  is  estimated  at 
810,800,000,000.  Professor  Scott  Nearing  (Income)  shows  figures  for  wage  and 
property-incomes  not  far  out  from  those  of  Prof.  King  and  those  here  advanced.  For 
occupational  incomes  see  particularly  the  repeatedly  quoted  study  by  Prof.  Streightoff, 
Distribution  of  Incomes  in  the  United  States,  1912  (vol.  52,  No.  2  of  Studies  in  His- 
tory, Economics  and  Public  Law,  Columbia  University). 


66  RISING  COSTS  OF  LIVING 

Europe  they  were  satisfied  to  work  for  less  than  the  native.  At  any 
rate,  it  must  be  remembered  that  75%  of  the  aliens  arriving  at  our 
shores  since  1900  had  no  special  vocation,  that  not  all  of  them  could  have 
been  surplus-producer  in  any  sense  of  the  word,  and  that  they  were  put 
necessarily  to  marginal  uses  with  low  wages.  The  entry  of  women 
workers  in  large  numbers  only  aggravated  the  situation.77  As  mem- 
bers of  a  family  they  frequently  needed  less  than  self-supporters  or 
heads  of  families,  thus  contenting  themselves  with  lower  pay  regardless 
of  what  they  produced.78  Wherever  labor  organized,  as  in  the  building- 
trades,  railroading,  and  mechanical  branches  of  industry  they  certainly 
gained  a  super- wage.  But  these  constitute  a  minority  and,  perhaps, 
the  more  efficient  ranks  whose  claim  to  a  superior  share  would  be  satis- 
fied anyhow.79 

VI.  Family  Budgets.  What  the  masses  of  producers  and  therefore 
of  the  population  in  the  United  States  received  we  must  judge  more  parti- 
cularly from  family-budgets  such  as  have  recently  been  tabulated  on  pri- 
vate and  public  initiative.  It  is  in  these  budgets  of  the  average  working 
man  that  we  can  find  the  range  and  trend  of  consumption  at  different 
times.  A  comparison  of  prices,  wholesale  and  retail  will  give  us  a  gen- 
eral idea,  but  an  analysis  of  typical  household  expenses  furnishes  the  de- 
tails that  make  a  story  complete.  For  budgets  are  ratios  of  income  and 
outgo.  To  the  man  of  the  street  who  thinks  in  plain  terms  it  is  the  ratio 
between  money  received  and  money  spent.  At  different  moments  he 
will  find  one  changing  or  the  other,  or  both.  Looked  at  more  closely, 
however,  this  ratio  is  one  between  labor  spent  and  product  returned. 
The  question  is  either,  how  much  and  how  long  have  I  worked  to  get 
these  goods?  or,  what  opportunities  was  I  allowed  to  labor  so  as  to  procure 
income?  Combining  the  two  aspects  of  the  problem  we  arrive  at  the 
query:  How  much  and  what  kinds  of  goods  did  I  receive  this  year  to 
consume  or  save,  and  how   much    and  what  kinds  some  other  year? 

77  Census  of  1910,  vol.  4,  pp.  54-56. 

78  See  Eighteenth  Report  of  Commissioner  of  Labor,  1904,  p.  362,  and  Streightoff , 
Distribution  of  Incomes,  p.  93. 

79  There  is  no  agreement  of  opinions  on  the  relation  between  unionism  and  super- 
wages,  and  there  hardly  can  be  in  view  of  the  lack  of  reliable  data.  For  a  brief,  but 
clear  consideration  see  Clark,  Walter  E.,  The  Cost  of  Living,  pp.  38-44.  Also:  Quar- 
terly Publications  of  American  Statistical  Association,  June  1910,  pp.  154-64,  where 
Prof.  Haney  of  the  University  of  Texas  gives  an  unbiased  comparison  of  wages  for 
both  organized  and  non-organized  workers. — On  the  other  hand,  the  depressing  effect 
of  immigration  on  wages  is  generally  acknowledged.  See,  e.g.,  Prof.  Taussig's  article 
in  Quarterly  Journal  of  Economics,  1906,  pp.  520-21. 


DISTRIBUTION  67 

In  the  end  costs  of  living  mean  such  levels  of  living  for  different  groups 
of  people,  a  change  being  welcomed  or  resented  according  to  its  nature  and 
the  aspirations  or  reasoning  of  the  consumer. 

The  bulk  of  prices,  most  authorities  agree,  have  risen  more  than  av- 
erage wages.  True,  the  index  for  two  hundred  and  fifty-five  commodi- 
ties at  wholesale  rose  only  about  20%  between  1890  and  1910,80  while 
wages  per  hour  rose  from  32%  to  37%.81  It  might  consequently  seem 
that  laborers  had  advanced  themselves  financially.  Offhand  one  feels 
all  the  more  inclined  to  believe  this  since  many  articles  like  sugar,  coffee, 
tea,  wheat  flour  and  bread,  rye  flour  and  corn  starch  among  foods,  as 
well  as  certain  fabrics  of  cotton  and  silk,  glassware,  tobacco,  boots  and 
shoes,  refined  petroleum,  soap,  kitchen  utensils,  and  mechanics'  tools 
have  become  relatively  cheaper.82 

However,  some  noteworthy  details  disillusion  us  quickly.  For 
society  as  a  whole  the  level  of  living  has  undoubtedly  risen,  and  there 
is  probably  no  family  that  has  not  in  one  way  or  another  benefited 
by  the  revolution  of  the  last  two  decades.  Yet  for  a  considerable  part 
of  the  population  the  displacement  of  goods  has  meant  increased  finan- 
cial pressure.  Viewed  rightly  average  labor-income  does  not  balance 
prices  as  nicely  as  one  would  wish.  In  the  first  place,  namely,  the  very 
commodities  which  the  average  family  consumes  in  largest  quantities, 
such  as  meats,  dairy  products,  eggs,  fats,  fish,  fuel,  woolens,  furniture, 
and  certain  services  rose  even  at  wholesale  more  than  wages.83  In  the 
second  place  most  retail  prices  advanced  more  than  those  at  wholesale,84 
and  in  the  third  place  retail  food-prices  went  up  long  before  wages,  and 
far  higher.85  Even  in  combining,  as  Professor  King  has  done,  all 
officially  listed  wholesale  prices  with  an  index  for  fifteen  main  foods  at 
retail  we  find  the  general  index  rising  fully  as  much  as  the  average  indus- 
trial wage-rate  per  hour.86  If  all  articles  of  consumption  were  indexed  at 
retail  and  weekly  or  annual  earnings  substituted  for  hour-rates,  wages 
would  show  a  relative  decline  of,  say,  8%  to  10%. 

This  is  the  trend  for  the  period  1890  to  1910  or  1913.  If,  in  addition, 
we  examine  the  decade  1900  to  1910  or  1913  the  fall  of  wages  would  be 

80  See  Bulletin  114  of  Bureau  of  Labor  Statistics. 

81  American  Economics  Review,  Dec.  1914,  article  by  Dr.  Rubinow  on  Recent  Trend 
of  Wages. 

82  Bulletin  114,  Bureau  of  Labor  Statistics. 
^Ibidem. 

84  Ibidem,  and  Bulletin  136  of  Bureau  of  Labor  Statistics. 

85  Ibidem. 

8e  King,  Wealth  and  Income,  p.  190. 


68  RISING  COSTS  OF  LIVING 

still  more  perceptible.  For  previous  to  1900  wages  fell  less  than  the  price 
of  necessities,  but  afterwards  the  tendency  was  the  other  way.  Manu- 
factures of  wide  use,  comforts,  and  luxuries  rose  but  little,  but  fuel  and 
lighting,  many  articles  of  personal  wear,  staple-foods  except  sugar,  bread, 
and  coffee,  also  building-stuffs  and  some  furnishings  rose  greatly.87  Thus 
the  purchasing  power  of  a  dollar  reckoned  at  wholesale  prices  for  all  goods 
except  foods  would,  if  expressed  by  one  hundred  for  the  decade  1890-99, 
stand  at  99  in  1900,  and  at  96.3  in  1910.88  Measured  by  retail-prices 
only  it  would  of  course  fall  more,  especially  if  we  compared  it,  not 
with  the  course  of  all  wages,  but  with  that  of  crude-labor  wages 
alone.  Any  impartial  and  comprehensive  test  of  wages  in  terms  of  re- 
tail price  will  force  the  conclusion  that  relatively  the  masses  of  employees, 
that  is  at  least  one-third  of  the  producing  population,  either  failed  to 
get  their  share  of  national  wealth,  or  benefited  much  less  than  a  general 
examination  of  supply-changes  would  suggest.89 

The  explanation  of  this  lies  in  the  excessive  rise  of  prices  for  the  most 
important  sorts  of  goods  such  as  food,  shelter,  and  fuel;  that  is  most 
important  either  because  life  depends  upon  them,  or  because  the  loss 
of  them  is  felt  as  a  hardship  from  force  of  habit  and  social  considerations. 
Both  things  are  involved  in  the  phrase  "standard  of  living."  Indeed, 
to  quote  one  writer,  such  a  standard  is  "  merely  a  level  of  living  so  fixed  in 
habit  that  any  falling  short  is  felt  as  a  privation."90 

Some  goods  are  essential  to  life  in  the  biological  sense.  We  must 
have  so  much  bread  and  meat  or  equivalents,  and  so  much  protection 
from  the  ills  of  weather.  This  is  a  minimum  demanded  by  every  man. 
But  beyond  this  he  wants  things,  first,  to  raise  a  family  and  maintain 
his  own  economic  efficiency,  secondly  to  provide  for  his  own  needs  or 
those  depending  on  him  in  old  age,  when  he  will  no  longer  be  able  to  work. 
Whatever  else  he  may  wish  for  sheer  enjoyment  or  to  improve  himself  and 
family,  the  right  to  live  and  to  keep  up  his  productive  powers  stand 
first.  It  embraces  wants  prescribed  by  law  of  nature,  to  be  satisfied  be- 
fore all  others  in  theory,  if  not  always  in  practice.  The  additional  wants 
marking  a  given  level  of  living  are  not,  however,  thereby  proclaimed 

87  Bulletin  114  of  Bureau  of  Labor  Statistics. 

88  King,  Wealth  and  Income,  p.  199. 

"Ibidem.,  p.  181.  See  especially  also  an  excellent  summary  of  evidence  in  the 
American  Economics  Review,  April  1916  by  Prof.  H.  P.  Fairchild  in  his  The  Standard 
of  Living,  Up  or  Down? 

90  Davenport,  Economics  of  Enterprise,  p.  3.  Compare  also  with  Seager,  Henry  R. 
Principles  of  Economics,  1913,  p.  80. 


DISTRIBUTION  69 

superfluous  or  repressible  at  will.  Man  after  all  is  the  slave  of  habits  and 
of  imitation.  He  is  moved  by  the  sayings  of  his  associates  or  the  com- 
parisons of  everyday  experience. 91  If  certain  things  are  allotted  to 
him  now,  and  then  suddenly  withheld  he  will  chafe  under  the  depri- 
vation. Or,  again,  if  commodities  gratifying  primary  wants  of  hunger 
and  cold  rise  in  price  the  poor  will  suffer  more  than  the  rich  whose 
alternatives  are  many.  Put  in  the  formula  of  the  German  statistician 
Engel:  People  spend  relatively  the  more  on  means  of  subsistence  the 
smaller  their  income,  and  the  less  the  greater  their  income.  In  the  for- 
mer case  luxuries  are  a  bagatelle,  in  the  latter  they  form  a  broad  margin 
indicative  of  a  high  standard  of  living. 

To  be  sure,  not  all  of  the  laws  formulated  by  Engel  hold  good  every- 
where, however  well-founded  his  main  contention.  There  are  national 
temperaments  and  environmental  forces  as  well  as  instinctive  valuations 
of  goods.  A  comparison  of  the  expenses  for  like  groups  of  goods  by  dif- 
ferent nationalities  in  the  same  country,  and  belonging  to  the  same  in- 
come-class, convinces  one  of  that  easily  enough.92  Each  age  has  its 
peculiar  ideals  and  customs,  each  race  its  own  predilections  and  codes  of 
conduct.  But  nonetheless  American  workingmen's  budgets  illustrate 
admirably  the  prime  importance  of  certain  kinds  of  foods  or  clothing 
and  shelter,  and  the  relative  smaller  advantage  to  be  gained  by  laborers 
from  a  cheapening  of  manufactures  or  services.  All  such  investigations 
tend  to  prove  what  a  study  of  production  in  general  has  shown  us  already: 
Namely  that  Civilization  has  not  yet  been  able  to  provide  a  rich  abun- 
dance of  essentials  even  while  multiplying  wants,  and  that  therefore  in 
the  process  of  exchange  and  pricing  the  essentials  must  so  appreciate 
as  to  form  a  growing  part  of  costs  among  groups  that  do  not  increase 
their  earnings  in  proportion  to  national  progress. 

91  For  an  early  stress  of  the  distributive  bearing  of  inelastic  wants  see  Jennings, 
Rich,  in  his  National  Elements  of  Political  Economy.  On  the  importance  of  social  value 
based  on  primary  instincts  and  imitation  see  Anderson,  B.  M.  Social  Value;  chapters 
13  and  14  where  the  sociological  theory  of  value  receives  adequate  treatment  in 
refutation  of  the  monetary,  exchange-idea  of  value.  Most  economists  have  made  use 
of  the  socio-ethical  interpretation  of  value  in  one  connection  or  another.  For  a  particu- 
larly suggestive  version  see,  however,  Watkins,  G.  P.,  Welfare  as  an  Economic  Quantity, 
1915,  where  "transputed  utility"  is  recognized  as  distinct  from  direct  and  complemen- 
tary utility  in  price-  and  social-problems. 

82  See,  e.g.  Report  of  British  Board  of  Trade  on  Costs  of  Living  in  American  Cities, 
reprinted  in  Sen.  Doc.  62.  C.  I.  ses.,  vol.  4,  pp.  81-90;  or  Eighteenth  Report  of  Com- 
missioner of  Labor,  pp.  626-29. 


70 


RISING  COSTS  OF  LIVING 


TABLE  14 

WORKINGMEN'S  BUDGETS  IN  1891  AND  1901,  SHOWING  PERCENTAGES 
SPENT  FOR  VARIOUS  ITEMS  PER  YEAR 


Income 

Food 

Rent 

Clothing 

Light  &  Fuel 

Misc. 

1891 
$400-500 

1901 

45.1% 
46  .9% 

15  .3% 
18  .6% 

14  .4% 
11.4% 

6.6% 
6.7% 

18  .6% 

16  .5% 

1891 
$600-700 

1901 

41  .2% 
43.5% 

15  .5% 
18  .5% 

15  .9% 
12  .9% 

5.9% 
5.8% 

21 .5% 
19  .4% 

1891 
$700-800 

1901 

38  .9% 
41  .4% 

15  .6% 

18.1% 

16  .3% 
13  .5% 

5  .3% 
5.3% 

23  .9% 
21 .6% 

1891 
$800-900 

1901 

38.1% 
41  .4% 

16.1% 
17.1% 

15  .1% 
13  .6% 

5.3% 
5.0% 

25  .4% 
23  .0% 

1891 
$1000-1100 

1901 

34.7% 
38  .8% 

15.1% 
17  .5% 

17.5% 

15  .1% 

4.5% 
4.9% 

28  .2% 
23  .7% 

1891 
$1100-1200 

1901 

30 .7% 

12  .2% 

16.5% 

3.9% 

36.7% 

Note:  The  percentages  of  1891  represent  an  average  for  2562  families;  those  of 
1901  for  11,156  families. 

Bureau  of  Labor:  Seventh  Annual  Report,  1891;  P.  864. 
Eighteenth  Report,  1903;  P.  101. 

Table  14  brings  out  some  leading  characteristics  in  American  bud- 
gets between  1890  and  1900,93  but  one  must  consult  the  details  in  order 
to  fully  comprehend  their  significance.  Thus  in  1900  the  average  family 
with  an  income  of  $750  to  $800  spent  of  its  total  food-bill  8.94%  for 
breadstuffs,  34%  for  meats  and  fish,  5.14%  for  eggs,  over  16%  for  dairy 
products,  nearly  15%  for  vegetables  and  fruit,  and  about  3%  for  lard. 
Of  the  remainder — some  eighteen  per  cent —  tea,  coffee,  sugar  and  molas- 
ses constituted  one-half.94  Again,  in  a  much  smaller  community  of  work- 
ers in  1908,  where  the  average  family  had  $600  to  S700  per  annum,  29.4% 
of  food-expenses  went  for  meats  and  fish,  21.6%  for  milk,  21%  for  cereals, 
13.8%  for  vegetables  and  fruit,  8%  for  sugar,  and  6.5%  for  alcoholic 
beverages.95    That  is  to  say,  by  far  the  largest  element  in  food  consisted 

93  Eighteenth  Rep.  Commissioner  of  Labor,  p.  101,  and  Seventh  Report,  p.  684. 

94  Eighteenth  Rep.,  pp.  82-83,  and  pp.  622-25. 

95  Chapin,  R.  C.  The  Standard  of  Living  in  New  York  City,  p.  140.     For  further 
interesting  details  see,  e.g.  American  Economics  Review,  June  1915,  giving  tables  of  ex- 


DISTRIBUTION  71 

of  the  very  goods  whose  supply  dwindled  most  since  1900  and  whose  prices 
rose  highest. 

As  a  rule  rents  form  from  12%  to  18%  of  family-expenses.96  Now 
two- thirds  of  all  homes  are  rented;  less  than  one-third  is  owned  free  of 
encumbrances;97  hence  a  rise  in  rent  relative  to  commodities  becomes  at 
once  a  momentous  event.  Besides,  frequently  much  more  than  one- 
seventh  or  sixth  of  the  annual  income  is  paid  out  for  shelter.  Thus  ac- 
cording to  a  recent  inquiry98  only  ten  per  cent  of  the  foreign-born  element 
in  American  eastern  cities  own  homes;  the  other  90%  pay  $156  rent 
out  of  an  average  annual  earning  of  $452,  that  is  34%.  Considering 
that  we  have  among  us  thirteen  millions  of  foreigners99  this  percentage 
tells  its  own  story. 

One  is,  in  short,  disposed  to  modify  Engel's  law  of  consumption  with 
respect  to  American  conditions  during  the  last  quarter  century  along 
these  lines:  (1)  The  average  wage-earner  spent  from  75%  to  80%  of  his 
income  on  food,  rent,  clothing,  light  and  heat.  (2)  One-half  of  the  out- 
lay for  food  goes  into  the  purchase  of  meats,  fish,  dairy  products,  and 
eggs.  (3)  Since  over  two-thirds  of  all  adult  money-earners  have  less  than 
$700  a  year  to  spend  the  abnormal  rise  of  foods  and  rent  forced  a  change 
of  diet  or  at  least  some  restrictions  for  which  an  extension  of  indulgences 
in  other  goods  could  not  entirely  compensate.  The  inelasticity  of  some 
wants  meant  nothing  else.  As  long  as  the  masses  look  to  what  might 
be  called  materialistic  gratifications  a  rapid  urbanization  of  industry 
and  life  will  affect  low  incomes  adversely.  Much  of  the  feeling  of  rising 
costs  of  living  since  1900  was  bound  up  in  this  circumstance.100 

At  the  same  time  we  should  see  also  the  cheerful  side  of  the  situa- 
tion. For  in  the  first  place  wages  are  tending  to  adjust  themselves  more 
and  more  to  the  change  in  production  and  profits.  Even  the  least  skilled 
laborers  will  fare  better  hereafter.  In  the  second  place  the  average 
family  is  not  as  large  today  as  a  generation  ago.  There  are  less  mouths  to 
feed  per  wage-earner,  and  particularly  so  among  the  middle  classes.    The 

penses  of  working  women  in  the  state  of  Washington,  compiled  by  Industrial  Welfare 
Commission,  1914.  Also:  Mrs.  L.  B.  Moore's  Wage-earners'  Budgets,  p.  96. 

96  See  references  given  under  notes  92-95. 

97  Census  of  1910,  vol.  I,  p.  1295. 

98  Sew.  Doc.  61.  C.  2.  ses.,  vol.  66,  pp.  104,  123  and  141. 

99  Ibidem. 

100  The  general  principle  of  costs  of  living  underlying  this  fact  is  remembered  in 
Marshall's  Principles  of  Economics,  2  ed.,  p.  510.  But  see  also  Cairnes,  J.  E.  Some 
Leading  Principles  of  Political  Economy,  ed.  of  1900,  p.  276. 


72  RISING  COSTS  OF  LIVING 

average  family  had  five  members  in  1890  and  4.6  in  1910.101  Not  only 
that,  but  the  number  of  children  under  fifteen  years  had  decreased  rela- 
tive to  population.102  This  is  an  advantage  from  a  certain  individual 
standpoint,  and  also  socially  if  the  death  rate  declines  in  proportion  or  still 
faster.  In  the  third  place  the  average  wage-earning  family  has  more  than 
one  bread-earner.  In  1900,  e.g.,  a  survey  of  twenty-five  thousand  such 
families  showed  an  average  of  1.82  earners.103  Twenty-two  per  cent 
had  children  at  work,  and  almost  as  many  per  hundred  kept  boarders 
or  roomers  to  help  meet  expenses.104  Child  labor  is  ordinarily  an  injury 
to  society  and  may  be  highly  reprehensible  for  special  reasons.  But 
we  have  plenty  of  evidence  to  prove  that  children  are  gradually  stepping 
out  of  the  labor  market,  while  grown-up  girls  and  women  are  taking  their 
places.105  The  emancipation  of  -woman  thus  has  aided  the  finances  of 
a  broad  middle  class  earning  between  $1,000  and  $2,000. 

In  the  fourth  place,  wage-earners  are  probably  more  actively  inter- 
ested in  business  profits  through  stock  and  bond  holdings  than  ever  be- 
fore.106 This  helps  to  equalize  incomes  in  a  wholesome  way.  But 
in  the  fifth  place,  taxes — a  forced  contribution  to  public  revenues  for 
social  ends — are  being  paid  increasingly  by  the  well-to-do  rather  than 
by  the  poor,  in  spite  of  tariffs  and  excises  which  burden  chiefly  the  masses. 

Taxes  and  fees  account  for  a  larger  portion  of  national  income  than 
is  ordinarily  realized.  In  1912,  for  instance,  the  receipts  of  federal  and 
local  governments  amounted  to  $2,500,000,000,  a  sum  equal  to  seven 
per  cent  of  the  total  income  from  which  it  is  taken.107    Less  than  3% 

101  Census  of  1910,  vol.  I. 

102  Ibid. 

103  Eighteenth  Annual  Report  of  Commissioner  of  Labor,  p.  362. 
1M  Ibid. 

105  Census  of  1910,  vol.  4,  p.  69,  and  Census  of  1890,  Part  II,  Introduction,  p.  121. 
See  also  Quarterly  Journal  of  Economics,  Feb.  1915,  pp.  123-25. 

im  No  reliable  data  are  at  hand  (see,  e.g.,  Streightoff,  Distribution  of  Incomes,  pp. 
35-40),  but  the  Journal  of  Commerce  in  issue  of  Dec.  26,  1912  estimated  the  number  of 
stock-holders  of  corporate  securities  at  two  millions.  Cited  by  Van  Antwerp,  The 
Stock-Exchange  from  Within,  p.  15. — Occasionally  the  reports  of  a  railroad  corporation, 
like  those  of  the  "Pennsylvania,"  give  an  insight  into  growing  participation  by  small 
earners.  But  the  best  circumstantial  evidence  is,  of  course,  the  rise  of  salaries,  bank- 
accounts,  profit-sharing  schemes,  large-scale  production,  stock-sales  in  times  of  panic, 
etc. 

107  Census  Bureau,  National  and  State  Revenues  and  Expenditures,  1903  and  1913, 
published  in  1914,  and  Financial  Statistics  of  Cities  over  30,000  Population,  published 
in  1913. — The  figures  here  given  are  the  somewhat  higher  ones  of  Prof.  King  in  his 
Wealth  and  Income — ,  pp.  138-143. 


DISTRIBUTION  73 

of  this  huge  sum  consisted  of  state  and  municipal  receipts  for  public 
services  rendered,  about  12%  of  revenues  from  the  federal  postal  ser- 
vice, the  rest  of  taxes  mainly.108  The  customs  receipts  were  $1.25 
per  capita  of  population  in  1890,  and  double  that  in  1912.109  Per  family 
of  five  this  would  represent  respectively  six  and  twelve  dollars,  or  but  a 
very  small  fraction  of  the  average  budget.  Meanwhile  the  excise  rate  on 
cigarettes  doubled,  and  between  1904  and  1914  that  on  tobacco — both 
of  which  were  essentially  paid  by  the  producer.110  In  addition  we  have 
now  a  corporation  and  a  general  income  tax. 

As  to  local  taxation.  Between  1903  and  1913  receipts  from  property- 
taxes  grew  93%  per  capita,  those  from  business  taxes  74%,  from  liquor 
taxes  115%,  from  inheritance  taxes  256%.m  Thus  state  revenue 
receipts  exclusive  of  loans  nearly  doubled  while  the  population  increased 
20%  and  national  wealth  70%.112  Cities  over  30,000  population  each 
raised  their  total  revenue  receipts  from  $20.12  per  head  to  $28.80,  their 
ad  valorem  tax  receipts  85%  per  head,  and  the  rate  per  hundred  of  as- 
sessed real  estate  values  10%.113  That  is,  special  assessments  and  busi- 
ness-taxes rose  most,  while  practically  no  new  levies  were  made  on  small 
incomes.     They  went  scot-free. 

And  now  to  another  viewpoint  still. 

One  of  the  striking  gains  of  these  years  of  rising  productivity  and 
rising  costs  of  living  is  the  shortening  of  the  working-day  already  referred 
to  and  the  elimination  of  irksome  toil  in  the  home.  Instead  of  twelve 
or  more  hours  per  day  most  laborers  now  work  but  eight  or  nine  hours. 
In  less  time  he  produces  more,  and  gets  more  in  variety  and  quality  of 
goods  or  services.  Safeguards  and  hygiene  have  become  common  watch- 
words. Life  about  the  factory  or  store  has  been  rendered  more  agree- 
able, less  prison-like  or  demoralizing.  With  monopolies  and  profits  on 
an  unprecedented  scale  has  come  a  larger  amount  of  wordly  goods,  lei- 
sure and  care  of  the  Self.  Invention  and  specialization  have  freed  us 
largely  from  drudgery  and  stagnation  of  the  mind.  The  universal  trend 
is  toward  a  dissemination  of  useful  and  balanced  knowledge,  toward  a 
prolongation  of  the  period  of  learning  and  growth  in  the  average  child, 
and  an  intensification  of  the  psychic  life  in  general. 

108  Ibid. 

109  Statistical  Abstract  for  1913. 

110  Reports  of  Commissioner  of  Internal  Revenue,  1904  and  1914. 

111  Bureau  of  Census,  National  and  State  Revenues  and  Expenditures,  1903  and 
1913,  Bulletin  114,  pp.  14-16. 

112  Ibid. 

113  Bureau  of  Census,  Financial  Statistics  of  Cities  over  30,000  Population,  p.  77. 


74  RISING  COSTS  OF  LIVING 

Household  economy  is  being  monetized,  that  is  labors  once  performed 
at  home  are  given  to  the  outsider  who,  though  charging  for  his  services, 
is  more  proficient.  By  an  extension  of  the  principle  of  labors  the  family 
thus  becomes  possessed  of  more  time  for  recreation,  education,  social 
amenities,  congenial  fields  of  employment,  or  care  of  children.  Sympto- 
matic of  this  new  spirit  is  an  increase  in  the  factory  output  of  baked  goods 
since  1890  of  200%,  of  426%  for  women's  clothing,  of  433%  for  millinery 
goods;114  or,  again,  a  doubling  of  the  number  of  steam  laundry  employees 
or  restaurant  keepers.115  In  a  word,  it  looks  as  though  the  jack-of-all- 
trades  were  to  disappear  not  only  in  industry  but  likewise  from  the 
home — whether  for  better  or  worse.  Cooking,  preserving,  sewing, 
cleaning,  washing,  dress  making  and  repairs  innumerable  are  being 
turned  over  to  vocations.  The  family  is  the  gainer  if  it  utilizes  rightly 
its  additional  leisure  hours;  or  if  it  does  not,  it  must  still  reckon  such 
leisure  as  part  of  an  income  for  the  sake  of  which  other  things  are  fore- 
gone, perchance  food  or  furniture  or  theatre  tickets  or  pleasure  trips. 
This  is  the  differential  viewpoint  of  any  group.  It  rests  on  the  fact  that 
all  income  has  an  outgo,  that  nothing  comes  for  the  asking,  and  that 
everything  has  two  sides,  a  pleasing  and  a  harshly  exacting. 

But  the  signs  are  not  disheartening  except  to  the  pessimistic.  Fam- 
ily disintegration  does  not  mean  a  collapse  of  the  unit  we  call  the  family, 
but  only  a  rearrangement  of  our  duties  and  rights.  The  number  of 
marriages  per  thousand  of  population  has  grown,  not  decreased.116  Stan- 
dards have  risen,  not  fallen.  Self-improvement  is  on  the  upward  bent, 
not  only  for  the  opulent,  but  also  for  the  less  richly  endowed.  It 
speaks  well  for  the  future  that  public  schools  enroll  more  children  per 
thousand  of  population  than  ever,  that  expenses  for  schools  have  quad- 
rupled in  two  decades,117  that  college  attendance  has  grown  300%,118  and 
that,  while  the  number  of  women  students  at  colleges  has  increased 
500%,119  the  number  of  women  teachers  has  grown  only  100%.120  For 
precisely  in  such  figures  may  we  read  the  hope  of  greater  productivity 
hereafter,  indeed  the  guarantee  that  industrial  progress  and  the  enlarge- 
ment of  social  income  are  permanent  features. 

114  Census  of  1910,  vol.  8,  pp.  381,  and  399-400. 

115  Census  of  1910,  vol.  4,  Occupations. 

116  Census  of  1910,  vol.  I,  p.  514. 

117  Statistical  Abstract  for  1913,  p.  104. 

118  Statistical  Abstract  for  1911,  p.  752. 

119  Ibid.,  p.  752. 
"°  Ibid.,  p.  727. 


APPENDIX  TO  CHAPTER  II,  PART  II 

Method  for  Calculating  the  Factorial  Incomes 

The  facts  presented  in  Table  13  were  arrived  at  as  shown  below, 
but  it  must  be  understood  that  only  the  principal  steps  can  be  here 
indicated.  To  attempt  more  is  out  of  question  in  a  pamphlet  of  this 
sort.  Partly  for  the  same  reason  incomes  from  abroad  or  outgos  to 
abroad  have  been  ignored,  though  the  sums  involved  are  anyhow  trifling 
compared  to  the  total  national  income. 

Incomes  for  1910 
A.  Wages 

1.  Calculate  the  number  of  "gainfully  occupied"  people  as  given 
in  the  Census  of  Occupations  for  1890  and  1910,  dividing  them  into  three 
groups,  viz.,  laborers,  enterprisers  (see  Table  13a,  p.  78  f.),  and  fee 
earners.  The  latter  represent  certain  professional  classes  paid  for  their 
services  not  in  salaries,  but  in  fees.  Table  13a  does  not  enumerate  them. 

2.  From  the  aggregate  of  laborers  deduct  all  children  (under  sixteen 
years)  working  on  farms  and  a  certain  number  of  adults  on  farms,  who 
presumably  do  not  earn  money  (see  Table  5,  p.  20).  Divide  the  re- 
mainder into  four  classes,  namely,  children,  females,  male  wage-earners, 
and  (300,000)  officials,  who  earn  much  more  than  the  average  laborer. 

3.  To  find  the  average  earnings  per  year  (1910)  of  these  groups  we 
rely  in  the  main  on  wage  statistics  supplied  by  Professor  Streightoff  in 
his  "Distribution  of  Incomes  in  the  United  States"  (see  Bibliography) 
and  by  Dr.  Rubinow  in  the  December  issue  of  the  American  Economics 
Review,  1914  (see  Bibliography).  Professor  Streightoff  (p.  139)  fur- 
nishes us  a  basis  for  the  year  1904,  at  which  time  65%  of  all  male  adults 
earned  annually  less  than  $626-,  27%  from  $626-,  to  $1,044,  and  8%  in  ex- 
cess of  $1,044.  Let  us  put  therefore  the  earnings  of  each  class  at 
respectively  $572,  $900,  and  $1,250,  that  is  for  the  year  1904.  Dr.  Rubi- 
now gives  us  a  basis  for  1910,  in  that  he  places  the  rise  of  wages  (industrial 
for  both  sexes,  but  which  may  here  be  applied  to  males  in  all  fields  of 
work)  between  1904  and  1910  at  14%.  Let  us  make  it  15%,  and  apply 
this  rate  uniformly  to  all  three  classes  of  male  laborers. 

4.  From  various  data  we  may  estimate  annual  earnings  of  women  in 
1910  at  $520,  and  those  of  children  at  $210. 

5.  Multiply  the  number  of  earners  in  each  class  of  male  workers,  and 
of  females  and  of  children  by  the  average  earnings  of  each  individual  in 
each  group,  and  deduct  from  the  total  10%  in  allowance  for  unemploy- 
ment (as  suggested  by  certain  data). 


76  RISING  COSTS  OF  LIVING 

6.  Similarly  obtain  total  earnings  of  the  three  hundred  thousand  of- 
ficials, taking  an  average  of  $2,500,  and  of  the  fee  earners,  taking  an 
average  of  $1,300  (as  suggested,  again,  by  certain  data). 

For  figures  see  Table  13b,  p.  81. 

B.    Profits 

1.  Divide  all  enterprisers,  as  found  in  Table  13a,  into  farmers,  and 
other  enterprisers,  excluding  from  the  latter  only  400,000  manufacturers 
whose  incomes  may  be  assumed  to  appear  essentially  in  the  net  returns 
of  corporations. 

2.  Numerous  data  already  referred  to  point  to  an  average  net  income 
per  farmer  of  $500.  For  other  enterprisers  assume  earnings  of  $1,100 
(as  suggested  by  certain  facts). 

3.  Take  two-thirds  of  corporate  net  earnings  as  actual  dividends  (see 
Commissioner  of  Internal  Revenue  Reports). 

4.  Multiply  earnings  of  farmers  and  other  enterprisers  by  number 
of  each  group,  and  add  corporate  dividends. 

For  figures  see  Table  13b. 

C.     Rentals  (Rent  and  Interest) 

1.  Farm  real  estate  was  worth  $35,000,000,000  in  1910.  Of  this  34%, 
if  we  turn  the  percentage  on  acreage  into  a  percentage  on  value  by  as- 
sumption of  uniform  values,  was  mortgaged  up  to  27.3%  of  its  value  (by 
partial  test).  Take  a  six  per  cent  interest  rate. — Of  the  total  32.2% 
was  not  operated  by  the  owner,  that  is  rented  on  various  terms;  but  put 
the  rate  at  4%  of  values  involved. 

2.  Corporations  carried  a  funded  debt  of  nearly  $32,000,000,000 
on  which  we  may  assume  the  average  interest  charge  (as  indicated  by 
sundry  facts)  to  have  been  about  4.5%. 

3.  Savings  in  the  country  amounted  to  $6,000,000,000.  Take  an 
average  interest  rate  of  3%. 

4.  The  total  public  debt  amounted  to  four  billions,  of  which  one  bil- 
lion yielded,  say,  2.5%,  and  three  billions,  say,  5%. 

5.  The  value  of  non-income  yielding  property  (consumption  goods 
and  tax  exempt  property,  money,  etc.,  as  per  table  of  national  wealth 
furnished  by  Census  Bureau,  1915)  was  $35,500,000,000.  The  national 
wealth  was,  as  per  Census,  $187,000,000,000  in  1912;  say,  $175,000,- 
000,000  in  1910.  Hence,  deducting  all  items  of  wealth  so  far  charged 
with  rentals  or  yielding  no  income,  we  have  $65,000,000,000  left.  Of  this 
some  $11,000,000,000  may  be  assumed  to  consist  of  corporate  property 
bonded  as  under  (2) ;  hence  ignore  them.    This  leaves  $54,000,000,000. 


DISTRIBUTION  77 

Of  this  $21,500,000,000  represents  the  value  of  city  homes,  if  we  assume 
that  the  value  of  all  city  real  estate  bears  the  same  percentage  to  total 
real  estate  that  is  recorded  for  1900,  and  if  we  assume  that  one-half  of 
city  real  estate  consists  of  residence  values.  This  item  will  be  considered 
presently.  We  have  thus  left  $32,500,000,000  in  the  shape  of  live  stock 
and  farm  implements,  factories,  etc.,  etc.  Say,  one-fourth  of  their  value 
is  fully  mortgaged  at  6%. 

6.  There  remains  to  be  computed  rent  for  use  of  homes  not  owned, 
and  interest  charges  on  homes  mortgaged.     The  procedure  is  this: 

a.  Figure  such  rents  in  percentage  of  annual  earnings  of  laborers  and 
enterprisers  as  given  under  (A)  and  (B).  But  omit  in  the  reckoning 
(a)  all  children,  (b)  one-half  of  all  female  laborers,  (c)  non  money-earn- 
ing farm  laborers,  and  (d)  all  farmers,  because  of  rent  charges  or  inter- 
est charges  figured  under  (1). 

b.  For  each  farm  laborer  earning  money  count  $60  per  annum  as  rent. 

c.  Of  city  homes  only  38%  are  owned  by  inmates.  That  is,  consider 
this  percentage  as  applying  equally  to  enterprisers  and  wage-earners  in 
the  city.  Then  take  16%  on  enterprisers'  incomes  a?  rent-charge  (as 
suggested  by  family-budget  data),  the  income  being  taken  at  $1,300  as 
before.     Of  the  total  sum  take  62%  as  rent  actually  paid. 

d.  The  value  of  city  residential  property  was  computed  at  $21,500,- 
000,000.  Of  this  12.7%  was  mortgaged  (Census  figures).  Assume  it 
mortgaged  up  to  one-half  its  value,  at  6%  interest. 

e.  Wage-earners  were  divided  into  three  classes  with  respectively 
$600,  $965,  and  $1440  for  1910  (based  on  figures  for  1904  with  increases 
in  next  six  years).  Assume  that  each  class  paid  of  its  income  respectively 
18%,  17%,  and  16%  for  rent,  and  count  one-half  of  the  female  earners 
in  the  lowest  income-class,  and  all  fee  earners  in  the  highest  class  (with 
$1,440),  at  respective  percentages  of  their  incomes  for  rent.  But  since 
only  about  62%  paid  rent,  the  rest  owning  their  homes,  take  only  62% 
of  the  total  rent  thus  calculated  to  have  been  paid  by  wage  and  fee 
earners. — Thus  national  wealth  and  all  incomes  actually  paid  out  among 
groups  are  accounted  for. 

Incomes  for  1890 

For  the  year  1890  we  have  to  rely  upon  statistical  data  of  some- 
what different  make-up,  hence  the  mode  of  procedure  varies  slightly 
from  the  one  just  outlined  for  the  year  1910. 

A.  Wages.  The  same  steps  were  observed,  except  that  from  the 
earnings  based  on  Professor  Streightoff's  data  12%  were  deducted,  in 
accord  with  Dr.  Rubinow's  index. 


78 


RISING  COSTS  OF  LIVING 


B.  Rentals. 

1.  The  total  mortgage-debt  on  real  estate  was  placed  by  the  Census 
at  about  $12, 500,000,000,  the  rate  of  interest  being  indicated. 

2.  Farm  rents  were  found  as  before. 

3.  Home  rents  were  found  as  before,  but,  of  course,  lower  prices 
meant  lower  percentages  on  (lower)  incomes  paid  for  such  rent  (see  Table 
14,  p.  70). 

4.  Savings  income  was  calculated  as  before. 

5.  Interest  charges  on  public  debts  were  computed  as  before. 

6.  An  interest  charge  of  $200,000,000  on  property  not  elsewhere  ac- 
counted for  was  assumed. 

C.  Profits.  Profits  were  made  a  residual  by  deducting  from  the  total 
national  income  of  SI 2, 500,000,000  (indicated  by  various  data)  the  sum 
of  wages  (and  fees)  plus  rentals. 

The  incomes  for  the  three  shares  are  thus: 
Wages  (and  fees)  87,375,000,000 

Rentals  SI, 800,000,000 

Profits  S3,325,000,000 


S12,500,000,000 
TABLE  13a 
LABORERS  AND  ENTERPRISERS  IN  1890  AND  1910 
(Based  on  Census  Reports  of  1890  and  of  1910,  V.  IV). 


I.     Laborers 


A.     Agricultural  Pursuits 

Agricultural  Laborers 

Lumber-  and  Rafts-men 

Herders  and  Drovers 

Woodchoppers,  Turpentine  laborers;  etc. 
Dairy  Hands 


1890 


3587 

6088 

66 

127 

30 

70 

53 

70 

18 

35 

3754 


1910 


6390 


B.     Professional  Services 

Clergymen,  Teachers  (except  of  Art  and  Music) 

Electricians,  engineers,  etc.,  Journalists 

Government  Officials 


DISTRIBUTION 


79 


C.     Domesticetic  and  Personal  Services 

Janitors  and  Sextons 

Laborers  (not  specified  elsewhere) 

Launderers 

Nurses  and  Midwives 

Bartenders,  Servants,  Waiters 

Housekeepers 

Soldiers,  Sailors,  etc 

Watchmen,  Policemen,  and  "Other  Service". 


27 

113 

1913 

1317 

248 

663 

48 

215 

1511 

1969 

92 

189 

28 

77 

90 

251 

3957 


4794 


D.     Trade  and  Transportation 

Boatmen  and  Sailors 

Bookkeepers,   Accountants,   Clerks,   Stenographers,  Type- 
writers, etc 

Commercial  Travelers 

Foremen,  etc 

Draymen,  Teamsters,  etc 

Messengers,  Porters  and  Helpers,  Packers,  Shippers 

Salesmen  and  Women 

Steam  and  Street  Railway  Employes 

Telegraph  and  Telephone  Linemen  and  Operators 

Newsboys,  Weighers,  Gaugers 


E.     Manufacturing  and  Mechanical  Pursuits 

Carpenters,  etc.,  Masons 

Plasterers , 

Roofers,  etc.,  other  Mechanics 

Employes  in  Chemical  Industry 

Clay,  Glass,  and  Stone  Industry 

Mining  Industry 

Butter  and  Cheese  makers 

"Other  Food  Preparers" 

Employes  in  Iron  and  Steel  Industry 

Leather  Industry 

Beverages  Industry 

Lumber  Industry 

Other  Metal  Industries,  except  Clockmakers, 
etc 

Paper  and  Printing 

Textile  Industries 

Seamstresses,  Tailors 

Hat,  Shirt  and  Collar  makers : 

"Other  Textile  Workers" 

"Miscellaneous"  (except  Manufacturers,  etc.,  and  Photog- 
raphers)  


All  Laborers. 


779 

1034 

39 

51 

22 

41 

26 

115 

171 

246 

387 

906 

11 

17 

115 

247 

690 

1653 

304 

366 

31 

51 

320 

667 

133 

296 

200 

359 

466  ■ 

783 

338 

497 

45 

101 

16 

119 

539 

1383 

4632 

8932 

15,152 

27,017 

80 


RISING  COSTS  OF  LIVING 


II.     Fee  Earners 

Actors  and  Showmen 

Architects,  Inventors,  etc 

Artists,  etc 

Dentist,  Physicians,  Surgeons 

Lawyers,  Literary  Persons,  etc 

Musicians,  "Other  Services" 


28 

70 

17 

63 

22 

34 

122 

198 

101 

162 

70 

171 

360 


698 


A.     Agricultural  Pursuits: 

III. 

Enterprisers 

Farmers,  etc 

5283 
73 
41 

5982 

Gardeners,  Florists,  etc 

143 

Stock  Raisers 

52 

5396 

6177 

B.     Domestic  and  Personal  Service. 

Barbers,  etc 

Hotel  Keepers 

Restaurant  and  Saloon  keepers 

Boarding  and  Lodging  Housekeepers 


85 

190 

44 

65 

91 

146 

44 

165 

264 


566 


C.     Trade  and  Transportation. 

Agents,  Bankers,  etc 

Hostlers,  Livery  stable  Keepers 

Hucksters,  etc 

Merchants,  etc 

Officials 

Undertakers,  Auctioneers 


210 

494 

81 

98 

59 

80 

691 

1004 

40 

144 

13 

25 

1094 


1800 


D.     Manufacturing  and  Mechanical  Pursuits 

Fish  and  Oyster  Men 

Bakers,  Confectioners,  Millers 

Clock  and  Watchmakers,  etc 

Milliners  and  Dressmakers 

Photographers 

Painters,  Glaziers,  etc 

Paper  Hangers 

Plumbers,  Fitters,  etc 

Manufacturers,  Officials 


60 

68 

136 

161 

25 

35 

356 

479 

20 

32 

222 

341 

12 

26 

61 

168 

154 

566 

1016 


1876 


DISTRIBUTION 


81 


All  Enterprisers 

All  Gainfully  Occupied. 


7806 
23,318 


10 ,452 
38,167 


From  above  number  of  manufacturing  enterprisers  deduct  one-third  as  (probably) 
laborers.     Hence,  final  figures: 


Enterprisers. 

Laborers 

Fee  Earners.. 


9,827 

27,642 

698 


TABLE  13b 
ITEMS  OF  INCOME  FOR  GROUPS 


A.  Wages 

Male  laborers  and  children. 

Female  laborers 

Officials 

Fee  Earners 

B.  Profits 

Farmers 

Other  Enterprisers 

Corporate  Dividends 

C.  Rentals 

From  Farm  Real  Estate 

From  Corporate  Bonds 

From  Savings 

From  Public  Debts 

From  Home  Rents 

From  other  Property 


Total  National  Gross  Income 


$12,579 

$  2  ,703 

750 

900 

S  3,100 
$  4,715 
$  2  ,200 

730 
$  1,381 

180 

175 
$  1,496 

504 


,000  ,000 
,000 ,000 
,000  ,000 
,000 ,000 

,000 ,000 
,000 ,000 
,000 ,000 

,000 ,000 
,000 ,000 
,000 ,000 
,000 ,000 
,000 ,000 
,000 ,000 


$16 ,932 ,000 .000 


$10,015,000,000 


$  4 ,466 ,000 ,000 


$31,413,000,000 


Note:  This  estimate,  made  before  the  publication  of  Prof.  Willford  I.  King's 
"Wealth  and  Income  of  the  People  of  the  United  States,"  is  in  fairly  close  accord 
with  the  calculation  there  presented  (p.  158).  By  another  route  Prof.  King  com- 
puted the  total  national  income  at  $30,529,000,000.  Statistics  on  production  for 
1909  would  give  us  about  $32,000,000,000,  so  that  on  that  side,  too,  the  agreement 
is  reasonably  satisfactory. 


CONCLUSION 

From  the  family  budget,  just  because  it  is  a  sort  of  microcosm,  we 
may  now  return  to  the  larger  world  in  order  to  read  the  meaning  of  rising 
costs  of  living  in  a  somewhat  different  light. 

If  anything  is  clear  it  is  that  the  social  dividend  since  1890  has  not 
decreased,  but  on  the  contrary  increased.  If  costs  of  living  have  risen, 
therefore,  it  could  not  mean  a  curtailment  of  goods  for  society  or  the 
average  individual.  The  explanation  must  lie  elsewhere.  Dissatis- 
faction arose  not  from  absolute  dearth  but  from  excessive  wants,  or 
from  a  change  in  the  apportionment  of  wealth  and  work  to  which  not 
all  people  have  been  able  to  adapt  themselves.  In  short,  a  great  pro- 
blem of  "making  ends  meet"  arose  for  some  folk  because  old  production 
and  value  relations  were  suddenly  upset. 

This  is  only  one  way  of  admitting  that  human  nature  is  complex  and 
erratic,  that  reason  does  not  rule  omnipotently,  but  that  instead  we  are 
swayed  by  emotions  and  caprices.  Our  inner  Self  collides  with  facts 
outside.  We  fail  to  adjust  ourselves  to  the  environment.  We  seek  to 
combine  irreconcilable  elements.  Our  views  like  our  habits  overlap. 
We,  so  to  say,  change  by  installments.  But  nature  and  the  forces  of  pro- 
duction will  swerve  without  warning,  letting  us  follow  as  best  we  may. 
Thus  costs  of  living  have  a  physical  and  a  psychical  aspect,  a  social  and 
an  individual  bearing,  a  supply  and  an  income  side,  a  functional  and  a 
structural  interpretation.  We  have  advance  and  recedence  simultan- 
eously, betterment  not  in  all  respects  nor  for  all,  hardships  and  unearned 
increments,  incomes  growing  and  yet  not  intensified  gratification  to 
match.  Whichever  way  we  look  at  it,  the  social  picture  attracts  us 
because  it  mirrors  life  in  action.  "Costs"  in  this  regard  are  always  dyn- 
amic, a  part  of  progress  and  a  manifestation  of  new  energy. 

The  process  of  change  goes  through  two  phases,  namely  one  of  work 
and  one  of  values.  Between  the  two  many  events  come  to  pass,  to  be 
woven  into  a  complete  story  of  budgetary  pressure. 

The  last  decade  of  the  nineteenth  century  saw  a  final  disappearance 
of  the  "frontier,"  that  is  of  lands  free  for  the  asking.  Hereafter  land  was 
thrown  open  to  the  public  more  rarely,  little  of  it  being  fit  for  the  plow  in 
virgin  state.  Harvests  were  increased,  not  by  bounty  of  nature  but  by 
dint  of  hard  labor  and  much  ingenuity.  Inevitably  this  meant  a  change 
in  the  farmer's  methods  of  production,  in  the  uses  he  made  of  his  tech- 


CONCLUSION 


83 


nical  knowledge  or  of  his  capital,  in  the  value  attached  by  society  to  his 
products,  and  the  direction  given  to  the  annual  surplus.  For  the  sur- 
plus, nonetheless,  grew.  Since  the  Civil  War  the  country  had  developed 
at  an  unprecedented  rate.  Soil  and  mine  and  forest  ranges  had  yielded 
vast  wealth  prized  more  highly  abroad  than  at  home.  Foreign  trade 
rose  to  gigantic  proportions,  and  with  it  new  opportunities  for  invest- 
ment came  as  rapidly  as  the  inventiveness  of  man  allowed. 

Inventions  increased  in  number,  revolutionizing  our  ideas  on  right 
living.  Many  of  the  epoch-making  devices  patented  during  the  eighties 
and  nineties  were  not  commercialized  till  the  dawn  of  the  twentieth  cen- 
tury. Since  then,  as  the  first  tools  and  plants  for  their  application  took 
tangible  shape,  industry  expanded  with  a  bound.  Capital  was  systemati- 
cally industrialized,  leaving  agriculture  to  its  own  advantages  coupled 
with  peculiar  limitations.  The  bulk  of  human  energy  was  harnessed  to 
machinery  in  cities,  above  and  below  the  surface  of  the  earth.  Further- 
more, an  enormous  food-stock  was  saved  by  the  mere  fact  that  laborers 
came  at  an  adult  age  to  us  from  Europe,  without  our  spending  a  cent  to 
rear  them.  Millions  of  strong  hands  and  trainable  minds  were  put  to 
work  in  fields  created  by  inventions  of  machine  or  management,  or 
through  change  of  demands  based  on  nothing  but  the  instability  of  the 
human  order. 

Two  things  happened  as  a  result.  The  first  was  a  widespread  dis- 
placement of  labor,  as  shown  in  Table  15,  the  second  a  socialization  of 

TABLE  15 

NUMBER  OF  MONEY  EARNERS  BY  FIELDS  OF  PRODUCTION, 

1890  AND  1910 


Field 

Number 
1890 

Per- 
centages 
of  Total 
Population 

1890 

Number 
1910 

Percent- 
ages of 
Total 
Popula- 
tion 
1910 

Agriculture,  Forestry,  Animal 
Husbandry,  Fishing 

8  ,341 ,000 
5  ,619 ,000 

8  ,491 ,000 

13  .3% 
9-1% 

13  .5% 

10,275,000 
10 ,739 ,000 

14 ,792 ,000 

H.2% 
11.6% 

16.1% 

Mining,    Manufacture,    Hand 
Trades,  etc 

Professions,  Trade,  Transpor- 
tation, Personal  and  Domes- 
tic Services 

Totals 

22,451,000 

35  .9% 

35  ,806 ,000 

38  .9% 

84  RISING  COSTS  OF  LIVING 

production  tantamount  to  a  revaluation  of  goods.  With  each  installa- 
tion of  machinery  and  labor  new  duties  strained  the  labor  market.  Men 
were  laid  off  or  given  another  occupation.  Many  changed  masters  and 
earnings  at  the  same  time.  The  side-tracking  was  swift,  but  the  repair 
slow.  It  was  a  struggle  for  the  survival  of  the  fittest,  a  test  as  to  who 
could  meet  emergencies  by  superior  talent  and  who  would  fail  for  lack  of 
initiative.  Precisely  in  this  manner  much  personal  training  went  to  waste. 
Work  lost  its  pleasure  and  became  pain.  Workers  transferred  their 
efforts  haphazardly  or  stepped  out  of  the  race  in  despair.  Inferior  labor 
held  on,  but  really  sold  itself  for  a  flitting  illusion.  Whole  groups  of 
wage-earners  thus  saw  their  income  reduced  temporarily  or  permanently. 
Like  so  much  material  equipment  their  specializations  went  to  the 
scrap-heap.  Income  took  undesirable  forms  or  lagged  behind.  Per- 
sonal services  gained  over  material  social  wealth,  and  the  return  to 
normal  fitness  prolonged  distress. 

On  the  other  hand,  the  obstacles  encountered  proved  largely  tran- 
sient. Improvements  levelled  wants  and  raised  average  shares.  Costs 
rose  for  one  group  relative  to  others  rather  than  for  society  in  general. 
The  crux  of  the  matter  was  redistribution  more  than  diminishing  re- 
turns in  any  one  field.  This  indeed  follows  from  what  has  already  been 
said,  from  rights  of  property  and  differences  for  human  capacities  which 
vary  always,  viewed  statically  or  with  particular  reference  to  changes  in 
environment.  As  tasks  of  production  changed,  so  the  disDosition  and 
chances  of  capital. 

Property  is  an  exclusive  right  in  primary  use-bearers,  or  in  what  may 
be  styled  the  secondary  and  tertiary.  Land  and  all  natural  resources 
make  up  the  first  kind,  tangible  capital-goods  the  second,  and  inven- 
tions applied  materially  or  non-materially,  the  third.  Such  rights  par- 
take of  the  essence  of  monopoly.  They  provide  differential  advantages, 
a  control  over  consumption-goods,  and  a  lien  on  income  either  as  it 
is  added  to  existing  wealth  or  where  merely  in  course  of  transference. 

When  demands  grow  faster  then  the  bounties  of  nature  their  owners 
will  charge  more  for  the  use  of  them.  This  is  one  way  of  explaining  rents. 
Another  is  to  think  of  a  persistence  of  desires  after  irreproducible  supplies 
begin  to  wane.  A  third  is  to  suppose  demand  altered  while  the  respective 
means  of  production  remain  immobile.  A  fourth  is  to  have  costs  fall 
from  under  fixed  pricings  at  a  given  moment.  Any  way  we  conceive 
it  there  arises  then  a  prospect  for  the  favored  parties  to  claim  more  than 
a  purely  competitive  share.  They  swell  their  gains  till  the  consumer 
has  learned  to  defend  himself  or  till  new  alignments  of  capital  efface 
the  old. 


CONCLUSION  85 

During  the  years  1890  to  1914  a  redistribution  of  incomes  was  accom- 
plished on  that  basis.  The  farmer  profited  as  land  was  put  to  better 
because  more  intensive  uses,  as  demand  for  his  products  over-reached 
supply,  as  with  each  betterment  of  live  stock,  plant  or  fruit  he  catered  to 
discriminating  tastes,  furnishing  excess  values.  Industrial  combination, 
gifted  with  superior  powers  of  production  and  not  infrequently  also 
with  a  snug  control  over  primary  goods,  lowered  costs  more  than  prices. 
The  latter  thus  could  rise  though  wages  moved  on  a  level.  Or,  where 
organized  labor  kept  step  with  the  march  of  technical  factors,  wages 
rose  too,  but  by  no  means  for  all  for  everywhere  alike  promptly. 

In  general,  it  would  seem,  the  proceeds  went  to  the  most  deserving. 
A  mobilization  of  capital  down  to  the  smallest  units  privately  owned 
gave  labor  a  share  in  the  social  fund  that  formerly  it  had  not  been  wont 
to  expect.  Rents  rose  per  unit  of  land,  but  in  the  aggregate  .not  as  much 
as  profits.  Interest  rates  tend  to  supplant  both  rents  and  royalties. 
Monopoly  triumphed  as  never  before,  but  not  more  as  a  selfish  aim  than 
to  the  advantage  of  all.  It  must  however  be  admitted  that  there  is  a 
difference  between  control  over  primary  and  control  over  secondary 
materials.  The  distinction  is  a  very  practical  one.  One  of  the  least 
commendable  features  of  recent  national  development  is  the  concen- 
tration of  ownership  in  timber,  lands,  ores,  and  water-power,  because 
in  principle  it  has  nothing  to  do  with  social  progress.  Productivity  does 
not  depend  on  expropriation  but  on  cooperation.  The  need  is  not  a 
consolidation  of  property  but  one  of  management  and  the  material 
agents  as  such.  The  tactics  of  big  business  for  control  of  the  former  sort 
are  not  calculated  to  produce,  but  to  transfer  the  ownership  of  goods,  the 
cause  of  improvements  being  subordinate  to,  or  even  incompatible  with, 
them.  Certainly  it  is  one  thing  to  socialize  income  through  superior 
abilities  in  person  or  capital-formations,  and  another  to  regulate  it  re- 
gardless of  direct  efforts,  simply  by  unqualified  proprietory  rights. 
When  profits  rise  due  to  such  forces,  when  prices  are  at  the  mercy  of 
rapacious  landlords — in  the  widest  sense  of  the  word — it  is  time  for  the 
government  to  interfere  and  to  restore  an  equilibrium  by  all  the  weapons 
at  its  disposal.  Public  regulation,  then,  will  have  to  offset  one  kind  of 
redistribution  by  another  which  repudiates  both  "natural  value"  and  un- 
limited monopoly-gains.1  For  in  their  balancing  lies  the  true  prosperity 
of  all. 

1  The  social  interpretation  of  value  and  income  rights  is  distinctly  gaining  in 
recent  economic  literature.  Numerous  publications  might  be  cited,  but  see  especially 
Carver,  T.  N.  Essays  in  Social  Justice,  ch.  10;  Hobson,  J.  A.  Work  and  Wealth,  A  Human 
Valuation;  Ely,  Richard  T.,  Property  and  Contract,  e.  g.,  V.  I,  p.  245;  Pigou,  A.  C. 
Wealth  and  Welfare. 


BIBLIOGRAPHY 

The  following  is  a  partial  list  of  the  sources  and  secondary  material  used  in  the 
preparation  of  this  essay.  Only  the  main  authorities  relied  upon,  or  books  whose 
thought  underlies  our  treatment  of  the  theme,  will  be  mentioned  here.  For  others  see 
notes  appended  to  each  chapter,  in  which  credit  is  given  to  whom  it  belongs. 

A.    Publications  of  the  United  States  Government,  Washington,  D.  C. 

I.     Census  Publications. 

1.  Thirteenth  Census  of  the  United  States,  1910,  Vols.  1,  4,  5,  8,  10.  11 

2.  Twelfth  Census  of  the  United  States,  1900,  Vols.  1,  3,  5,  7,  9-10 

Special  Reports  on  Employees,  Wages  and  Occupations 

3.  Eleventh  Census  of  the  United  States,  1890 

Compendium,  three  volumes 
Special  Reports — 

Crime,  Pauperism,  and  Benevolence 

Farms  and  Homes 

Manufacturing  Industries 

Mineral  Industries 

Real  Estate  Mortgages 

Population 

Insane,  Feeble-minded,  Blind 

Agriculture 

Wealth,  Debt,  and  Taxation 

4.  Special  Reports  of  the  Bureau  of  the  Census — 

Wealth,  Debt,  and  Taxation,  1907 
Statistics  of  Women  at  Work,  1907 
Manufactures  in  1905 
Fisheries  of  the  United  States,  1908 
Central  Electric  Light  and  Power  Stations,  etc.,  1907 
Benevolent  Institutions,  1910 

Financial  Statistics  of  Cities  having  over  30.000  population,  1912 
Paupers  in  .Almshouses,  1910 
Telephones  and  Telegraphs,  1912 
Wealth,  Debt,  and  Taxation  in  1913,  two  volumes 
II.     Publications  of  the  Department  of  (Commerce  and)  Labor 

1.  Statistical  Abstract  of  the  United  States,  annual 

2.  Bulletins  of  the  Bureau  of  Labor  Statistics,  Whole  Number:  114  to  140 

3.  Annual  Reports  of  the  Commissioner  of  Labor — 

Seventh  Report 
Eleventh  Report 
Eighteenth  Report 

4.  Report  on  Condition  of  Woman  and  Child  Wage-Earners  in  the  United  States, 

Sen.  Doc.  645,  61.  C,  2.  Ses. 

5.  Reports  of  Immigration  Commission 

Sen.  Doc.  633,  61.  C.  2  Ses.;  747,  61.  C.  3  Ses. 

6.  Reports  of  Commissioner  of  Corporations,  1903  to  1914 


BIBLIOGRAPHY  87 

III.     Publications  of  the  Department  of  Agriculture 

1.  Annual  Reports  for  1911,  1912,  1913,  and  1914. 

2.  Yearbook  for  1904,  1905,  1911,  and  1912 

B.  Private  Publications 

I.  Literature  on  the  High  Cost  of  Living 

1.  Clark,  Walter  E.,  The  Cost  of  Living,  1915 

2.  Gerber,  G.  H.,  The  High  Cost  of  Living,  1915 

3.  Nearing,  Scott,  Reducing  the  Cost  of  Living,  1914 

4.  Franklin,  F.,  The  Cost  of  Living,  1915. 

5.  For  many  instructive  and  succinct  accounts  of  special  aspects  of  the  problem  of 
changing  costs  of  living  see:  Readers  Guide  to  Periodical  Literature,  1904  to  1914 

II.  Works  largely  Statistical  in  Nature 

1.  King,  Willford  I.,  The  Wealth  and  Income  of  the  People  of  the  United  States,  1915 

2.  Mitchell,  Wesley  C,  Business  Cycles,  1913 

3.  Nearing,  Scott,  Income,  1915 

Wages  in  the  United  States,  1911 

4.  Spahr,  Charles  B.  Present  Distribution  of  Wealth  in  the  United  States,  1896 

5.  Streightoff,  Frank  Hatch,  The  Distribution  of  Incomes  in  the  United  States,  1912 

6.  Article  on  the  Recent  Trend  of  Real  Wages  in  the  United  States,  in  American 

Economics  Review,  Dec.  1914,  by  Dr.  Rubinow,  I.  M. 

III.  Books  on  Economic  Theory 

a.  On  the  Quantity  Theory  of  Money 

T.     Fisher,  I.,  The  Purchasing  Power  of  Money,  1909 

Why  the  Dollar  is  Shrinking,  1914 
2.     Hobson,  J.  H.,  Gold,  Prices,  and  Wages,  1914 

b.  General  Theory 

1.  Anderson,  B.  M.,  Social  Value,  1911 

2.  Cairnes,  J.  E.,  Some  Leading  Principles  of  Political  Economy 

3.  Davenport,  H.  J.,  Economics  of  Enterprise,  1913 

4.  Fetter,  Frank  A.,  Economic  Principles,  Vol.  1,  1915. 

5.  Fisher,  I.,  Capital  and  Income,  1906 

6.  Hobson,  J.  A.,  Work  and  Wealth,  A  Human  Valuation,  1914 

7.  Marshall,  Alfred,  Principles  of  Economics,  1890 

8.  Patten,  Simon  N.,  The  Theory  of  Prosperity,  1902 

Reconstruction  of  Economic  Theory,  1912 
New  Basis  of  Civilization,  1907 

9.  Smith,  Adam,  An  Inquiry  into  the  Nature  and  Causes  of  the  Wealth  of  Nations 

10.  Watkins,  G.  P.,  Welfare  as  an  Economic  Quantity,  1915 

11.  Wieser,  Friedrich  von,  Natural  Value  (W.  Smart's  translation) 

IV.     Books  on  Sociology 

1.  Cooley,  Charles  H.,  Social  Organization,  1909 

2.  Ross,  E.  A.,  Social  Control,  1901 

Social  Psychology,  1908 


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